International Journal of Financial Management

Arindam Laha ¹, Pravat Kumar Kuri ²

Affiliations
1 Department of Commerce, The University of Burdwan, Golapbag, Burdwan, West Bengal, IN
2 Department of Economics, The University of Burdwan, Golapbag, Burdwan, West Bengal, IN

Abstract

The outreach of microfinance programme is considered to be a means to enhance the economic well-being among the member households through poverty alleviation. A wide cross-country variation in the outreach of microfinance programme to the poor households is observed in the world. Despite the significant growth of microfinance institutions and its active borrowers, the penetration of microfinance lending services to the poor households in India is observed to be limited. In addition, there is a wide inter-state disparity in the achievement of microfinance outreach in India especially among the poor households. A composite index has been constructed using the penetration, availability and usage indicators of microfinance outreach to examine the interstate variations in the level of its achievement. Subsequently, attempt has been made to analyse the role of microfinance in alleviating poverty across the states of India. The result shows that out of 27 states and Union Territories, only in seven states (Kerala, Andhra Pradesh, Tamil Nadu, Goa, Himachal Pradesh, Tripura, and Karnataka) outreach of microfinance programme has made a significant impact on the reduction of poverty.

Keywords

Financial Inclusion, Microfinance, Poverty, Index of Microfinance Outreach Among the Poor Households, Asia, India

JEL Classification: G21, I32, O16, J16.

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Avisek Sen ¹, Arindam Laha ²

Affiliations
1 Department of Commerce, Kabi Jagdram Roy Government General Degree College, West Bengal, IN
2 Department of Commerce, University of Burdwan, Golapbag, Burdwan, West Bengal, IN

Abstract

In the present era of finance capitalism, it is a great challenge for any country to strengthen its financial sector so as to realise the vision of financial inclusive society. Beside this major challenge, the government has to ensure the well-being of the society. Well-being of the society is not only indicated by the income level of an individual, but also by the non-economic factors like health and education level of the people. But now-a-days, more and more emphasis is given on the concept of well-being of the population in the context of limiting role of GDP in ensuring equitable distribution of wealth. Formulation of a policy in achieving both the policy objectives (i.e., development of financial sector and ensuring well-being of the population) essentially calls for an understanding on the linkages between financial development and well-being of the population. In this context, this paper attempts to develop a conceptual framework on the linkages between the financial development and the human well-being in the context of inclusive development paradigm. In addition, this paper also tries to conceptualise the theoretical framework on the implications of financial development and/or human well-being on the level of income inequality or the other way round. The empirical analysis in this paper shows that there is positive and significant bidirectional relationship between the financial development and human development across selected countries of the world. Government intervention in the development in the financial sector (or achieving a higher level of well-being of the population) can also reduce the extent of inequality in the distribution of income.

Keywords

Financial Development, Human Development, Income Inequality, Well-Being.

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Arindam Laha ¹

Affiliations
1 Professor, Department of Commerce, The University of Burdwan, West Bengal, IN

Abstract

The progress of microfinance outreach can be seen as an effective intervention mechanism to enlarge people’s choice, with respect to some basic indicators of human development. The most important choices are considered to be a long and healthy life, to be educated, and to enjoy a decent standard of living. Under the circumstances, attempts have been made in this paper to examine the cross-country variations in outreach of microfinance sector and that of human development in South Asia, and to establish the empirical relationship between them. In addition, the relationship between microfinance outreach and human development across Indian states is of special interest in this paper. Substantial evidence presented in this paper cast doubt on the empirical association between microfinance outreach and human development, especially after the ‘microfinance meltdown’ in 2008 in South-Asian countries as a whole, and the Indian economy in particular. Therefore, microfinance is not a panacea for achieving human development, rather these semi-formal microfinance institutions can only be a means to promote financial inclusion in low financially inclusive regions which are characterised by the limited presence of formal financial institutions.

Keywords

Microfinance Outreach, Human Development, Convergence, South Asia, India

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