Essay on Microfinance Banks Investments And Poverty Alleviation

Essay on Microfinance Banks Investments And Poverty Alleviation

Length: 1629 words (4.7 double-spaced pages)

Rating: Better Essays

Open Document

Essay Preview

Microfinance Banks Investments and Poverty Alleviation in Nigeria

I.G. Okafor
Department of Banking and Finance, Caritas University, Enugu, Nigeria.

The industrialized economies of the world have been associated with heavy investments. Investments create jobs, increase income per capita, reduce poverty level, increase standard of living and increase domestic product (GDP). It is for these that the Central Bank of Nigeria (CBN) in 2005, established the Microfinance Policy Framework. That framework gave birth to microfinance banks. Among the products of the microfinance banks were investments. This study therefore looked at the impact of microfinance banks investments on poverty alleviation in Nigeria for the period 1993 – 2012. Annualized data were collated from the Central Bank of Nigeria (CBN) and the National Bureau of Statistics. Poverty index was the dependent variable while the microfinance banks investments was the independent variable. The controlled variables were the liquid liabilities (M2), the Federal Government capital expenditure and interest rate. Multiple linear regression model was adopted for the test of the hypothesis. The result showed that microfinance banks investments did not have significant positive impact on the poverty alleviation in Nigeria during the period of study. Recommendations offered included conscious encouragement of deposits with microfinance banks, government provision of necessary infrastructure such as power, water and passable roads so as to reduce running costs for the microfinance banks. The savings out of these will swell the available fund for investments.

Keywords: Microfinance, Banks,Investments, Poverty Alleviation

1.0 Introduct...

... middle of paper ...

... it, there will be non-performance of physical capital and this will impede economic growth (Harbison, 1964).
Basically, for economic growth to translate to reduction in poverty and unemployment, it should be human centered (Wilson and Briscoe, 2003): The role of human capital in the growth process of any nation is crucial. It is a major tool for poverty alleviation.

2.2 Empirical Review
Okorie et. al (2015), in their study investigate the impact of investment on economic growth in Nigeria economy. They applied an error distributed lag model via least squares. Their results showed that increase in private sector credit led to increased domestic investment. They also find that the total domestic investment in Nigeria, in the long run, had a positive impact on the Nigeria’s economic growth as increased total domestic investment led to increase in economic growth.

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Essay on Impact of Microfinance Upon Developing Countries

- Question: “Microfinance appears to offer a ‘win-win’ solution, where both financial institutions and poor clients profit” (Morduch, 1999). Critically assess this statement with reference to the empirical literature. Introduction Microfinance has achieved growing significance as a tool for poverty alleviation with the year 2005 marked as the United Nations International Year of Microcredit. Over the years, the world has witnessed a remarkable growth in the number of institutions offering microfinance and the number of clients reached....   [tags: financial institutions, microcredit]

Better Essays
2324 words (6.6 pages)

Breaking the Cycle of Poverty: Micro-Loans Essay

- Many countries in the world have a concerning percentage of poverty in which both food and financial sources are disturbingly limited. Most of the world’s poor have suffered from the deficits of using financial services. Because of a bad credit history or a lack of proof of employment, financial services are most often not accessible for the low income client market. In the western and developing countries, people are being eliminated by the traditional financial system based on the deficiency of guarantees of unaffordable costs to process the loan application, and the lack of data related to their credit history....   [tags: sustainable development mechanisms]

Better Essays
3025 words (8.6 pages)

Essay about Microfinance and the Reduction of Poverty

- Imagine that someone lives in the States, and this person’s local bank just offered them a one-hundred dollar loan. What do they do. Do they scoff. Do they ask if there has been a mistake and then ask to speak to the branch president. The fact of the matter is, if someone received a loan for one hundred dollars in a developed nation, it would do nothing to lessen his or her worries. It would not go particularly far in providing food or clothing for their children, let alone provide them with an education....   [tags: poverty essay]

Better Essays
1297 words (3.7 pages)

Microfinance Is The Gold Bullet For Poverty Essay

- Move aside sliced bread and perforated toilet paper, microfinance is coming through. Does that sound a little dramatic. I thought so, but so are claims that microfinance is the silver bullet for poverty, the kryptonite for hunger, and the solution for one of the most complex issues humanity faces. Every year, the western world donates billions of dollars to microfinance initiatives. American families donate 20, 30, 100 dollars a month, yearning for that feeling of security that they have done something truly impactful for a family in need halfway across the world....   [tags: Poverty, World Bank, Debt, Loan]

Better Essays
1391 words (4 pages)

Essay on Microcredit: The Solution to Global Poverty

- Over 1.4 billion people live on less than $1.25 per day (Singer 7). In impoverished nations, the life expectancy is below fifty, compared to the average of seventy-eight years in rich nations. The mortality rate of children is twenty times greater in “least developed” countries than in developed nations. Nearly 18 million people die every year from avoidable, poverty-related causes (UNICEF). On the other side of the spectrum, there were more than 1,100 billionaires in the world in 2007 (Singer 9)....   [tags: world poverty, microfinance]

Better Essays
1913 words (5.5 pages)

Microfinance System and Poverty Essay

- ... He wanted to prove that it was possible to lend to the poor people without “collateral” (Todero and Smith, P764). He saw many benefits for the poor if his idea ever became successful. Many poor people can benefit from this new sort of banking. Its primary target was people who had no chance in their lives to receive credit from the bank to start anything in life. For example with this new program, urban peddler can borrow money from Grameen bank, start a small business, and potentially can become a vendor (Todero and Smith, P764)....   [tags: developing countries, micro credit programs]

Better Essays
2031 words (5.8 pages)

Essay Microfinance and MicroFranchises: A Solution to Poverty

- With the rise of the morning sun, most of us awake to a day of possibilities, but for those in extreme poverty daybreak brings only anxiety and despair as they try to survive on little to nothing. Over one billion people are currently living in extreme poverty, unable to fathom a future free from hunger, disease and oppression. Extreme poverty, defined as living on $1.25 a day or less, traps generations into an arduous existence with few opportunities to escape. Helping to eliminate extreme poverty means first understanding that it is possible to provide people with a pathway out and if it is possible, we therefore have the responsibility to do so....   [tags: poverty essay]

Better Essays
1123 words (3.2 pages)

Targeting Microfinance as a Tool to Alleviate Poverty Essay

- Microcredit lending (aka microfinance) is an economic policy that has become a particularly popular tool as a means to alleviate poverty in developing countries. A large majority of microfinance is focused towards low income individuals in Latin American countries. The idea of microfinance is such that a non-governmental organization, financial institution, or a private lender gives an individual with entrepreneurial aspirations a small loan as start-up capital for their business. The amount of the loan is typically between 25 USD and 200 USD....   [tags: Economics]

Better Essays
2012 words (5.7 pages)

Pros and Cons of Microfinance Essay

- All across the world high poverty levels in certain areas is extremely common especially in overpopulated, less developed regions. It was not until rather recently that the idea of poverty and helping those less fortunate became a socially accepted topic for those living in developed regions. “The turn of the century as been marked by the emergence of a remarkable global conscience: an awareness of world poverty and the articulation of the will to end poverty” (Roy, 6). This newly founded mindfulness of poverty in the world has led to the need for actions, and in order to deal with poverty and under development the idea of microfinance has been created....   [tags: social issues, poverty]

Better Essays
1879 words (5.4 pages)

Essay on Investments in Malaysia

- Investments in Malaysia Malaysia is an open economy and is trying to ease rules to attract foreign investments. In a recent survey, conducted by ASEAN – BAC survey on ASEAN Competitiveness, Singapore ranked as the most attractive for investment in 45% of survey respondents planning to invest in the country, followed by Malaysia (42%). (Competitiveness, 2013). Malaysia is also considered as the gateway to expand into not only the ASEAN region, but Asia in general. The government is striving towards achieving a developed nation status by 2020 and in order to give impetus, the government has laid out policies like Government Transformation Plan (GTP), New Economic Model (NEM), 1Malaysia and 10t...   [tags: foreign investments, tourism]

Free Essays
1363 words (3.9 pages)