Informations et ressources scientifiques
sur le développement des zones arides et semi-arides

Titre : Determinants of Rural Households’ Participation in Formal Microfinance Programs in Malawi

Auteur : Nyoni, Mauluka Abel

Université de soutenance : Gent University

Grade : International Master of Science in Rural Development 2020

Résumé
The study aimed at investigating the major determinants of rural households‟ participation in formal microfinance programs in Malawi. A probit model was used on secondary data on “credit and loans” collected by the National Statistical Office (NSO) between March 2004 and April 2005 under the World Bank funded Integrated Household Surveys program to answer the study hypotheses. To control for the effect of omitted variable bias and endogeneity, we use exogenous age and land size as instrumental variables for credit constraint, and estimate that credit constraint is markedly negatively related to participation in formal microfinance programs. Further, the findings reveal that households with smaller dependency ratio, without contact with extension agents and those residing far away from trading centers/bomas are less likely to participate in formal microfinance programs. The empirical model results further show that households headed by younger and less educated heads, male headed households, households with larger dependency ratio and smaller land size are more likely to be credit constraint. The findings suggest important policy lessons which can help improve the participation of rural households particularly women in formal credit programs. The binding land constraint in most rural households suggests a change of focus in the delivery of microfinance services to include both agricultural and non-farm loans which will give the rural poor an opportunity to make trade offs between the two as per their convenience. Additionally, an improvement in the delivery of extension services on issues of credit would help create awareness about the potential sources of credit to the rural populace.

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