Microfinance Bank as a Predictor of Poverty Alleviation and Economic Growth in Nigeria

Résumé

The paper examines microfinance banks as a predictor of poverty alleviation and economic growth in Nigeria from 1980 to 2020. The paper made use of the Johansen co-integration test and an error correction model as estimation techniques, and the results of the Johansen co-integration test showed a long-run relationship between microfinance banks, poverty alleviation, and economic growth in Nigeria. However, the results of the error correction model showed that poverty alleviation has no significant impact on economic growth in Nigeria and that the assets of microfinance banks have a significant impact on poverty alleviation and economic growth in Nigeria. The result also shows that the deposits of microfinance banks have a significant effect on poverty alleviation and economic growth in Nigeria, but that the loans and advances of microfinance banks do not have a significant effect on poverty alleviation and economic growth in Nigeria. The paper conclude that microfinance banks are the most important determinants of poverty alleviation in a country, and this relationship has been thoroughly debated and acknowledged by many governments. However, as long as poverty and underdevelopment exist, microfinance banks will be crucial. While the paper recommends that the government should introduce rules that would allow microfinance loans to have an impact on poverty reduction through the small and medium-sized firm sector and to lend money to small businesses, the Nigerian central bank should establish rules that require a certain amount of bank deposits to be set aside as loans.