Promoting Economic Development and Poverty Reduction through Microfinance Banks

Abstract

This study examines the role of microfinance banks in economic development and poverty reduction in Nigeria from 1992 to 2019. Annualized data used for the study were gotten from CBN statistical bulletin and World Bank database. Preliminary test such as; descriptive statistic, ADF unit root test, co-integrated test, and ECM were first performed on the data to check their reliability. Thereafter OLS regression method was used to test the data. The result shows that microfinance banks’ deposits and investment positively and significantly influence the economy. It also revealed that microfinance bank credit positively and significantly influences the level of poverty, while inflation rate negatively and significantly influence the level of poverty in the economy. The study recommends that credit advancement should be focused on productive areas of the economy that will enhance productivity, development and poverty reduction in Nigeria.