South Asian Microfinance Outreach: An Economic Context
This study analyses the breadth and depth of outreach of microfinance institutions (MFIs) from the economic perspective, considering both open and close economic indicators. Additionally, this study differentiates the impact of the welfare variable (human development) on breadth and depth of outreach of microfinance institutions in the South Asian region. We use Market-Mix data from the year 1999 to 2017. For analysis, we employed a fixed-effect model based on the Hausman test. Additionally, two-stage least squares used to identify the endogeneity problem. The results illustrate the positive impact of welfare indicator (Human development) and closed economic factors (Economic growth, private credit, labor force participation) on the depth of outreach except for the inflation and interest rate that are negatively impacted. Whereas, open economic factor (Foreign investment) does not impact on the depth of outreach. However, all sets of open, close, and welfare economic indicators positively impact on the breadth of outreach except the interest rate and inflation rate. It is concluded from the results that macroeconomic variables affect the depth of outreach of microfinance institutions. The government and microfinance policymakers can use economic indicators to increase further microfinance outreach that further helps in alleviating poverty from the region.