Abstract
Purpose
This paper investigates the effect of microfinance activities on the economic wellbeing of individuals at the grassroots. It specifically investigated the effect of microfinance interest rates, microfinance products/services and microfinance social support on grassroots economic wellbeing. Furthermore, it examines how microfinance activities, such as social support and lending, interact to impact the economic wellbeing of beneficiaries at the grassroots.
Design/Methodology/Approach
The study used a sequential exploratory mixed methods research design. First qualitative data was collected from ten purposively sampled participants to probe and confirm some constructs in the survey instrument. Quantitative data was then collected from 350 randomly sampled customers of the top five microfinance institutions in Ghana using structured survey instrument. Data was analysed using descriptive and multivariate analysis.
Findings
The study results showed that microfinance cost (β = 0.312, t = 5.457, p < 0.001), interest rates (β = − 0.191, t = − 3.204, p < 0.01), products/services (β = 0.328, t = 7.136, p < 0.001) and social support (β = 0.312, t = 6.631, p < 0.001) all had a significant impact on grassroots economic wellbeing. It also highlighted the complexity of the interactions among microfinance activities, government policies and poverty alleviation interventions.
Practical Implications
These findings have structural implications for the operation of microfinance institutions in developing countries such as Ghana. To promote longevity and effectively exploit the inherent benefits of microfinance activities for grassroots beneficiaries, the current top-bottom approach used in the introduction of poverty alleviation-related interventions must be revised to a more sustainable participatory approach where the input of grassroots participants should be sought. The latter approach will help address the policy lapses common to the many failed government interventions on microfinance activities.
Originality/Value
The paper advocates the need to introduce government interventions that encourage a saving culture among individuals at the grassroots. It offers an unorthodox approach (bottom-up stakeholder participatory orientation in the formulation of policies) to addressing the many policy lapses undermining inclusiveness for informal sector participants with regard to accessing finance. Finally, it provides a blueprint towards the empowerment of minority groups at the grassroots to alleviate poverty.
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Appietu, R.K., Dankwa, I.O. & Caesar, L.D. Exploring the Nexus Between Microfinance Activities and Economic Wellbeing at the Grassroots: Evidence From an Emerging Market Economy. Glob Soc Welf 8, 337–349 (2021). https://doi.org/10.1007/s40609-020-00172-6
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DOI: https://doi.org/10.1007/s40609-020-00172-6