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Microfinance and Poverty A Macro Perspective

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The paper tests the hypothesis that microfinance reduces poverty using cross-country data, including a panel. More specifically, the paper examines whether a country with higher MFI’ s gross loan portfoli has lower poverty after controlling for other factors associated with poverty and taking account of the endogeneity associated with MFI’s gross loan portfolio. The rest of the paper is organized as follows: section II summarizes the recent evidence of the effects of microfinance on poverty in developing countries. Section III provides a brief explanation of the data which the present study draws upon. Econometric specifications and are discussed in Section IV. The main results and simulations are given in Sections V and VI respectively. The final section offers some concluding observations.

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