Microfinance and poverty nexus: a critical review of Islamic and conventional microfinance

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The spotlight of this study is to examine the relationship between microfinance and poverty with specific focus to OIC countries and Islamic Microfinance institutions (MFls). Using an unbalanced panel dataset covering of 2,904 microfinance institutions from 120 countries and applying two econometrics techniques: Generalized method of moments (GMM) and two stage least squares instrumental variable regression, my study fails to establish the positive role of microfinance institutions in alleviating poverty. Taking into account the endogeneity problem associated with microfinance loans and domestic credit, I show that microfinance institutions neither reach the poor nor the poorest. I find no significant difference in performance of microfinance institution in OIC and Non-OIC countries when it comes to poverty reduction. Moreover, evidence suggest that role played by Islamic microfinance institutions and conventional MFIs in combating poverty is indifferent. The study contributes to the literature by providing new evidence on the microfinance-poverty nexus at macro level, comparing between OIC and Non-OIC countries as well as Islamic and conventional MFIs. Results presented in this study have important policy implications for researchers, investors, governments and international bodies ...
Microfinance , Poverty reduction , OIC countries , Islamic microfinance institutions (MFIs) , Generalized method of moments (GMM) , Project paper (MSc)
Nkoba, M. A. (2019). Microfinance and poverty nexus: a critical review of Islamic and conventional microfinance (Master dissertation). INCEIF, Kuala Lumpur. Retrieved from

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