Income and Non-Income Outcomes of Microfinance

Abstract

The study assessed the impact of microfinance specifically micro-credit on beneficiaries and non-beneficiaries of Yaalex Microfinance Limited in selected communities of Takoradi Metropolis and Mfantsiman Municipality of Ghana. Focusing on microfinance outcomes such child education, child health, business profitability and ease of credit access the study tests the hypotheses that access to credit has increasing effect on the latter variables. Probit and IV-probit, propensity scores matching (PSM) and treatment effect were used to examine the causal effect on beneficiaries and nonbeneficiaries using data from the two study areas. The method of study was based on quazi-experimental approach and attempt was made to minimize the potential problems that would arise from contamination, spill-over and self programme self-exclusion selection biases. The results show that access to micro-credit eases the financial constraint among business operators in the informal sector. However, given women education can ease credit constraints in the informal sector and gender differences constraint access to credit. Again, access to micro-credit impacts positively on child education and health. Finally, in terms of business profitability, micro-credit clients do better than non-clients especially those in education to be at par with their men counterparts. MFIs should intensify the credit with education concept as part of their products. Educational and health loan products need to be introduced by MFIs. Finally, MFIs should target market niche such as trading that produces revenue quickly.