Reports
Discussion Papers
No.299 Financial Permeation As a Role of Microfinance: Has Microfinance Actually been Helpful to the Poor?
by INOUE Takeshi and HAMORI Shigeyuki
May 2011
ABSTRACT
This
article
is
distinct
in
its
application
of
the
logit
transformation
to
the
poverty
ratio
for
the
purpose
of
empirically
examining
whether
the
financial
sector
helps
improve
standards
of
living
for
low-income
people.
We
propose
the
term
financial
permeation
to
describe
how
financial
networks
expand
to
spread
money
among
the
poor.
We
measure
financial
permeation
by
three
indicators
related
to
microfinance
institutions
(MFIs)
and
then
examine
its
effect
on
poverty
reduction
at
the
macro
level
using
panel
data
for
90
developing
countries
from
1995
to
2008.
We
find
that
financial
permeation
has
a
statistically
significant
and
robust
effect
on
decreasing
the
poverty
ratio.
Keywords:
Financial
Permeation,
Microfinance,
Panel
Data,
Poverty
Reduction
JEL
classification:
G21,
O16,
O50
Please note that discussion papers are works in various stages of progress and most have not been edited and proofread and may contain errors of fact or judgment. Revised versions of these papers may subsequently appear in more formal publication series. The views expressed in this publication are those of the author(s). The IDE does not guarantee the accuracy of the data included and accepts no responsibility for any consequences arising from its use.