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Comparing Microfinance and Education for Poverty Reduction – A Macro Perspective

Kienlein, Tobias LU (2016) EKHM52 20161
Department of Economic History
Abstract
Better access to finance and higher education levels in a country are two major policy areas of governments and international development cooperation organisations for the goal of reducing poverty. Microfinance has become a popular instrument to facilitate access to finance, but comparative evidence on a macro scale is scarce. This thesis examines the relative importance of the two policy areas using an unbalanced panel of 42 countries over the period of 1999 to 2013. As an indicator for microfinance, gross loan portfolio is used and for education, government expenditure on education. As measures of poverty, the poverty headcount ratio, the poverty gap and the squared poverty gap are used. Taking into account education, the effect of... (More)
Better access to finance and higher education levels in a country are two major policy areas of governments and international development cooperation organisations for the goal of reducing poverty. Microfinance has become a popular instrument to facilitate access to finance, but comparative evidence on a macro scale is scarce. This thesis examines the relative importance of the two policy areas using an unbalanced panel of 42 countries over the period of 1999 to 2013. As an indicator for microfinance, gross loan portfolio is used and for education, government expenditure on education. As measures of poverty, the poverty headcount ratio, the poverty gap and the squared poverty gap are used. Taking into account education, the effect of microfinance becomes smaller in comparison to previous empirical studies. Generally, the thesis finds a similar effect of the two determinants in absolute terms and on the three of the poverty measures. Education is more robust to different regression strategies. From a simulation exercise of the expected effects on poverty headcount ratio, the finding is that, on average, a relative increase by the factor 2 in microfinance gross loan portfolio compares to an increase of the factor 1.15 for government expenditure on education. (Less)
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author
Kienlein, Tobias LU
supervisor
organization
course
EKHM52 20161
year
type
H2 - Master's Degree (Two Years)
subject
keywords
microfinance, poverty, poverty gap, education, country panel, comparison, fixed effects, random effects, instrumental variables, developing countries, macro perspective, development
language
English
id
8887585
date added to LUP
2016-09-19 13:36:49
date last changed
2016-09-19 13:36:49
@misc{8887585,
  abstract     = {Better access to finance and higher education levels in a country are two major policy areas of governments and international development cooperation organisations for the goal of reducing poverty. Microfinance has become a popular instrument to facilitate access to finance, but comparative evidence on a macro scale is scarce. This thesis examines the relative importance of the two policy areas using an unbalanced panel of 42 countries over the period of 1999 to 2013. As an indicator for microfinance, gross loan portfolio is used and for education, government expenditure on education. As measures of poverty, the poverty headcount ratio, the poverty gap and the squared poverty gap are used. Taking into account education, the effect of microfinance becomes smaller in comparison to previous empirical studies. Generally, the thesis finds a similar effect of the two determinants in absolute terms and on the three of the poverty measures. Education is more robust to different regression strategies. From a simulation exercise of the expected effects on poverty headcount ratio, the finding is that, on average, a relative increase by the factor 2 in microfinance gross loan portfolio compares to an increase of the factor 1.15 for government expenditure on education.},
  author       = {Kienlein, Tobias},
  keyword      = {microfinance,poverty,poverty gap,education,country panel,comparison,fixed effects,random effects,instrumental variables,developing countries,macro perspective,development},
  language     = {eng},
  note         = {Student Paper},
  title        = {Comparing Microfinance and Education for Poverty Reduction – A Macro Perspective},
  year         = {2016},
}