MBA Journals Peer-reviewed management research from Consortium e-Learning Network

NOLEGEIN Journal of Entrepreneurship Planning, Development and Management

Evaluating MF Contribution to India's Economic Growth Sector wide

  1. Dipali Gajjar Assistant Professor, Department of Management, SEMCOM, Charutar Vidya Mandal University, VV Nagar, Gujarat, India.
  2. Uday B Pandya Marketing Re-Presentative, Department of Management, venkys Pvt. Ltd., Ahmedabad, Gujarat, India.
  3. Darshna Dave Dean, Department of Business Management, Sardar Patel University, Anand, Gujarat, India.

Abstract

The role of microfinance in lending to the poor has been crucial in establishing an inclusive economy through the development of banking services while supporting economic development by creating entrepreneurs with an emphasis on supporting women. The objective of this research paper is to explore the relationship between microfinance loans and GDP for periods between 2016 and 2025 to aid in the development of financially sustainable microfinance systems. Using an empirical approach utilizing Spearman’s rank-order correlation coefficient (rs), this research investigates this relationship. This study presents the findings of the analysis (rs = 0.19, p > 0.30) and finds that microfinance loans provide a positive correlation with GDP, but by themselves may not produce a statistically significant positive effect on GDP. It is clear that microfinance will play an integral role in supporting both rural and urban development, job creation, and supporting small and medium-sized enterprises (particularly women-owned). However, while many challenges remain, such as limited access to the formal banking sector, high interest rates, over-borrowing, and regulatory inadequacies, limiting the growth of microfinance, ongoing efforts necessary to increase governance, financial literacy, and sustainable lending will aid in overcoming these challenges. In conclusion, microfinance loans in and of themselves will not necessarily drive GDP growth; however, they can serve as useful tools for the creation of inclusive economic opportunities, poverty alleviation, and job creation

Keywords

Support