Does Participation in Microfinance Programs Improve Household Incomes: Empirical Evidence From Makueni District, Kenya

Although microfinance has elicited different reactions from different stakeholders, there seems to be a general agreement that it is useful in reducing poverty. This study is an attempt to contribute in to the debate on the impact of microfinance on household incomes. We use a pooled data set collected from the south western part of Makueni district in Kenya to study the households’ access to microfinance credit and how the credit affects their incomes. We control for household selection bias as well as endogenity problems in the sample. Cross sectional analysis fails to show any significant positive impact of microfinance on poverty reduction. Only after the inclusion of time dynamics in the study are we able to find a weak positive significance of microfinance on household incomes.household, incomes, Kenya, Makueni, Agricultural Finance, Consumer/Household Economics, Demand and Price Analysis, Financial Economics, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, Health Economics and Policy, Labor and Human Capital, Marketing, Production Economics, Research and Development/Tech Change/Emerging Technologies,

Does Participation in Microfinance Programs Improve Household Incomes: Empirical Evidence From Makueni District, Kenya

Although microfinance has elicited different reactions from different stakeholders, there seems to be a general agreement that it is useful in reducing poverty. This study is an attempt to contribute in to the debate on the impact of microfinance on household incomes. We use a pooled data set collected from the south western part of Makueni district in Kenya to study the households’ access to microfinance credit and how the credit affects their incomes. We control for household selection bias as well as endogenity problems in the sample. Cross sectional analysis fails to show any significant positive impact of microfinance on poverty reduction. Only after the inclusion of time dynamics in the study are we able to find a weak positive significance of microfinance on household incomes