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The impact of microfinance institutions in local financial markets: a case study from Kenya

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  • Susan Johnson

    (Centre for Development Studies, University of Bath, UK)

Abstract

This paper looks beyond the direct impact of microcredit provision on users to examine whether microfinance institutions (MFIs) have had wider impacts within the local financial markets in which they are operating. It considers the potential for both competition and demonstration effects on other financial providers. In the context of local financial markets in and around the small town of Karatina in Central Kenya, supply side information is used to investigate the key changes in provision between 1999 and 2003. The paper concludes that changing macroeconomic conditions have been the main driver increasing competition for middle and lower income clients and that few competition or demonstration effects resulting from the MFIs are in evidence. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Susan Johnson, 2004. "The impact of microfinance institutions in local financial markets: a case study from Kenya," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(3), pages 501-517.
    • Handle: RePEc:wly:jintdv:v:16:y:2004:i:3:p:501-517
    DOI: 10.1002/jid.1088
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    References listed on IDEAS

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    Cited by:

    1. Gloukoviezoff, Georges, 2016. "Evaluating the impact of European microfinance. The foundations," EIF Working Paper Series 2016/33, European Investment Fund (EIF).
    2. Copestake, James, 2007. "Mainstreaming Microfinance: Social Performance Management or Mission Drift?," World Development, Elsevier, vol. 35(10), pages 1721-1738, October.
    3. Nudrat Faria Shreya, 2021. "Are Two Sources of Credit better than One?: Credit Access and Debt among Microfinance Clients in Bangladesh," Studies in Economics 2103, School of Economics, University of Kent.
    4. M.Aruna & Rema Jyothirmayi, 2011. "The Role of Microfinance in Women Empowerment: A Study on the SHG Bank Linkage Program in Hyderabad (Andhra Pradesh)," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 2(4), pages 77-95, May.
    5. Thi Anh Nhu Nguyen, "undated". "Financing Constraints On Smes In Emerging Markets: Does Financial Literacy Matter?," Review of Socio - Economic Perspectives 201711, Reviewsep.
    6. Miranda-Reyna, Montserrat & Carrillo-Urbina, Gilberto Jaime, 2017. "Impacto de los indicadores financieros en el desempeño de las instituciones microfinancieras en México: un estudio de panel desbalanceado," eseconomía, Escuela Superior de Economía, Instituto Politécnico Nacional, vol. 12(46), pages 41-60, Primer se.
    7. Akudugu, M. A., 2012. "Estimation of the Determinants of Credit Demand by Farmers and Supply by Rural Banks in Ghana’s Upper East Region," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society (AESS), vol. 2(02), pages 1-13, June.
    8. Alex Addae-Korankye & Alex Abada, 2017. "Microfinance and Women Empowerment in Madina in Accra, Ghana," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 7(3), pages 222-231, March.

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