Microfinance for change: how financial innovation enables structural transformation
Abstract This study examines the influence of microfinance institutions’ (MFIs) financial innovation on structural transformation. For this purpose, we considered a household survey from Nepal. The survey collected data on various individual and household characteristics, borrowing patterns, and occ...
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| Format: | Article |
| Language: | English |
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SpringerOpen
2025-01-01
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| Series: | Financial Innovation |
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| Online Access: | https://doi.org/10.1186/s40854-024-00738-9 |
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| author | Shankar Ghimire Bharat Singh Thapa Rong Zheng |
| author_facet | Shankar Ghimire Bharat Singh Thapa Rong Zheng |
| author_sort | Shankar Ghimire |
| collection | DOAJ |
| description | Abstract This study examines the influence of microfinance institutions’ (MFIs) financial innovation on structural transformation. For this purpose, we considered a household survey from Nepal. The survey collected data on various individual and household characteristics, borrowing patterns, and occupations over the years. The key question focused on occupations before and after borrowing, a categorical response variable indicating 1 for occupational change after borrowing and 0 otherwise. Therefore, we use logistic regression to estimate the probability of occupational change, given two measures of financial innovation: loan purpose and size. The results show that the number of households involved in agriculture significantly decreased, with the majority switching to businesses and convenience stores, indicating a shift to the manufacturing and service sectors. These findings suggest that MFIs contribute to local-level structural transformation by enabling borrowers to move away from traditional employment. This study has important implications for policymakers, development practitioners, and academics interested in promoting economic development through microfinancing in low-income countries. |
| format | Article |
| id | doaj-art-a85cdbf0896e477f8c9c5804aec44662 |
| institution | Kabale University |
| issn | 2199-4730 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | SpringerOpen |
| record_format | Article |
| series | Financial Innovation |
| spelling | doaj-art-a85cdbf0896e477f8c9c5804aec446622025-01-19T12:36:06ZengSpringerOpenFinancial Innovation2199-47302025-01-0111112010.1186/s40854-024-00738-9Microfinance for change: how financial innovation enables structural transformationShankar Ghimire0Bharat Singh Thapa1Rong Zheng2Florida Southern CollegeTribhuvan UniversityWestern Illinois UniversityAbstract This study examines the influence of microfinance institutions’ (MFIs) financial innovation on structural transformation. For this purpose, we considered a household survey from Nepal. The survey collected data on various individual and household characteristics, borrowing patterns, and occupations over the years. The key question focused on occupations before and after borrowing, a categorical response variable indicating 1 for occupational change after borrowing and 0 otherwise. Therefore, we use logistic regression to estimate the probability of occupational change, given two measures of financial innovation: loan purpose and size. The results show that the number of households involved in agriculture significantly decreased, with the majority switching to businesses and convenience stores, indicating a shift to the manufacturing and service sectors. These findings suggest that MFIs contribute to local-level structural transformation by enabling borrowers to move away from traditional employment. This study has important implications for policymakers, development practitioners, and academics interested in promoting economic development through microfinancing in low-income countries.https://doi.org/10.1186/s40854-024-00738-9MicrofinanceFinancial innovationOccupational changeStructural transformation |
| spellingShingle | Shankar Ghimire Bharat Singh Thapa Rong Zheng Microfinance for change: how financial innovation enables structural transformation Financial Innovation Microfinance Financial innovation Occupational change Structural transformation |
| title | Microfinance for change: how financial innovation enables structural transformation |
| title_full | Microfinance for change: how financial innovation enables structural transformation |
| title_fullStr | Microfinance for change: how financial innovation enables structural transformation |
| title_full_unstemmed | Microfinance for change: how financial innovation enables structural transformation |
| title_short | Microfinance for change: how financial innovation enables structural transformation |
| title_sort | microfinance for change how financial innovation enables structural transformation |
| topic | Microfinance Financial innovation Occupational change Structural transformation |
| url | https://doi.org/10.1186/s40854-024-00738-9 |
| work_keys_str_mv | AT shankarghimire microfinanceforchangehowfinancialinnovationenablesstructuraltransformation AT bharatsinghthapa microfinanceforchangehowfinancialinnovationenablesstructuraltransformation AT rongzheng microfinanceforchangehowfinancialinnovationenablesstructuraltransformation |