The effects of microcredit access and macroeconomic conditions on lower income group

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Abstract

This paper examines the impact of the microcredit access and macroeconomic conditions on the headcount of lower income group. By identifying the determinants that contribute to the successful impact can make the microcredit organization's evaluation more strategic and efficient that can leads to outgrow of the lower income group (proxy by Bottom 40 Headcounts) and move-up to the middle-income group. The study utilizes the panel data (fixed effect analysis) of 16-states and federal territories (Malaysia) from the year 2011 to 2015. Based on the overall findings of this study, it is crucial to analyze the impact from the microcredit access and macroeconomic condition on the headcount of lower income group. The study reveals that the number of loans per microcredit office has significant positive effect on lower income group headcount. The numbers of borrowings from the agriculture sector and female to male ratio borrowings have significant negative effect on the headcount of lower income group. The finding implies that the female has a higher tendency towards reducing the headcount of lower income group. Additionally the general macroeconomic condition also influences significantly the lower income group, as this group is vulnerable to economic shocks. This paper will contribute to the existing microcredit studies in the following dimension namely implications for academic, microfinance institutions and policymakers. Therefore, effective government fiscal policy as well as regulatory quality can be good instruments that may promote both uses and access as to microcredit that can be provided to reducing the lower income group headcount and develop family's economic wellbeing, besides narrowing the income inequality gap. The study has identified and unfolds determinants that are always the best choice for lower income group.

Original languageEnglish
Pages (from-to)285-304
Number of pages20
JournalInternational Journal of Economics and Management
Volume12
Issue number1
Publication statusPublished - 1 Jun 2018

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Macroeconomic conditions
Microcredit
Low income
Borrowing
Microfinance institutions
Income
Strategic evaluation
Economic shocks
Politicians
Fixed effects
Family economics
Fiscal policy
Economic well-being
Panel data
Agriculture
Malaysia
Loans
Government
Income inequality

Keywords

  • Lower income group
  • Macroeconomic condition
  • Microcredit access
  • Microcredit organization

ASJC Scopus subject areas

  • Business and International Management
  • Economics, Econometrics and Finance(all)
  • Strategy and Management

Cite this

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title = "The effects of microcredit access and macroeconomic conditions on lower income group",
abstract = "This paper examines the impact of the microcredit access and macroeconomic conditions on the headcount of lower income group. By identifying the determinants that contribute to the successful impact can make the microcredit organization's evaluation more strategic and efficient that can leads to outgrow of the lower income group (proxy by Bottom 40 Headcounts) and move-up to the middle-income group. The study utilizes the panel data (fixed effect analysis) of 16-states and federal territories (Malaysia) from the year 2011 to 2015. Based on the overall findings of this study, it is crucial to analyze the impact from the microcredit access and macroeconomic condition on the headcount of lower income group. The study reveals that the number of loans per microcredit office has significant positive effect on lower income group headcount. The numbers of borrowings from the agriculture sector and female to male ratio borrowings have significant negative effect on the headcount of lower income group. The finding implies that the female has a higher tendency towards reducing the headcount of lower income group. Additionally the general macroeconomic condition also influences significantly the lower income group, as this group is vulnerable to economic shocks. This paper will contribute to the existing microcredit studies in the following dimension namely implications for academic, microfinance institutions and policymakers. Therefore, effective government fiscal policy as well as regulatory quality can be good instruments that may promote both uses and access as to microcredit that can be provided to reducing the lower income group headcount and develop family's economic wellbeing, besides narrowing the income inequality gap. The study has identified and unfolds determinants that are always the best choice for lower income group.",
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