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Role of microfinance saving in Cameroon: a neo-structuralist analysis

Listed author(s):
  • Jacob Tche
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    Purpose - The aim of this paper is to establish an original database from fieldwork on microfinance institutions in Cameroon. Design/methodology/approach - The main method used for the research involved statistical analysis of an original survey data. The latter fieldwork analysis has enabled us to test the hypothesis of neoclassical and neo-structuralist economists advocating a significant relationship between microfinance savings and liberalised real bank deposit interest rates. Findings - The statistical analysis carried out indicated that microfinance savings are associated to variables other than the rate of interest. The failure of a liberalised interest rate policy to cause a significant portfolio shift from microfinance into the banking system does not support the interest responsiveness of savings as advocated by the McKinnon-Shaw school. This paper supports, therefore, the neo-structuralist analysis of financial development where microfinance institutions are an important structural feature of financial systems in many developing countries. Research limitations/implications - It would be interesting to extend statistical analysis undertaken in this paper to other African countries. Practical implications - The main policy issue affecting microfinance from the empirical analysis is the need to mitigate the extremely high interest rates utilised by microfinance. Banks may be encouraged to undertake a series of measures such as guaranteeing of future loans to their customer by linking savings and loans to attract microfinance members. Originality/value - The contribution of this paper, therefore, is to provide a unique opportunity to investigate the association between microfinance institution assets and real interest rates in an African country.

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    Article provided by Emerald Group Publishing in its journal International Journal of Development Issues.

    Volume (Year): 8 (2009)
    Issue (Month): 1 (June)
    Pages: 48-60

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    Handle: RePEc:eme:ijdipp:v:8:y:2009:i:1:p:48-60
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