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MICROFINANCE AND ECONOMIC GROWTH IN ALBANIA: AN ARDL APPROACH

by | Jan 14, 2020 | DOI 2018

Forcim Kola, Teuta Cerpja
Marin Barleti University, Tirana,  Albania
DOI: https://doi.org/10.31410/eraz.2018.125

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4th International Conference – ERAZ 2018 – KNOWLEDGE BASED SUSTAINABLE ECONOMIC DEVELOPMENT, Sofia- Bulgaria, June 7, 2018, CONFERENCE PROCEEDINGS published by: Association of Economists and Managers of the Balkans, Belgrade, Serbia;  Faculty of Business Studies, Mediterranean University – Podgorica, Montenegro; University of National and World Economy – Sofia, Bulgaria; Faculty of Commercial and Business Studies – Celje, Slovenia; Faculty of Applied Management, Economics and Finance – Belgrade, Serbia, ISBN 978-86-80194-12-7

Abstract

Microfinance has been growing rapidly with the aim to lift people out of poverty and create sustainable development. However, according to some literature there is a mixed evidence of its net benefit to the economic growth.
In general, microfinance provides financial tools and services to low-income individuals who would otherwise find themselves excluded from the formal banking system. Microfinance is often associated with microcredit, small-sum credit loans for entrepreneurs and small-business owners. But in the last few years, the microfinance industry has expanded to incorporate a broad range of services, such as savings and deposit accounts and life insurance becoming such a tool for generating economic growth in developing countries while reducing poverty level.
This study intends to empirically test the theoretical relationship between microfinance and some other macroeconomic factors with the poverty reduction, based on the evidences of Albania. The study is carried out using a time series Auto-Regressive Distributive Lag (ARDL) analysis based on the annual data.

Key words

microfinance, microcredit, macroeconomic factors, poverty reduction, ARDL

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