Abdussalam Muhammad

GHANA COMMUNICATION TECHNOLOGY UNIVERSITY BUSINESS SCHOOL THE ROLE OF MICROFINANCE INSTITUTIONS IN POVERTY ALLEVIATION: A CASE STUDY OF OKAIKOI NORTH MUNICIPALITY. A Thesis submitted to the Department of Banking and Finance, Ghana Communication Telecommunication University in partial fulfillment of the requirement for the degree of: BACHELOR OF SCIENCE IN BUSINESS ADMINISTRATION (BANKING AND FINANCE OPTION) 2023 i DECLARATION This paper as part of the requirement for BSc. in Business Administration awarded by Ghana Communication Technology University. I hereby declared that, this project study is entirely the result of hard work, research, and inquiries. I am confident that this project work is not copied from any other person except where due acknowledgement has been made in reference. This research contributes to the existing knowledge on the role of micro finance institutions in poverty alleviation, specifically in Okaikoi North Municipality. The findings may have implications for policy, practice, and future research in this field. AUTHOR: MUHAMMAD ABDUSSALAM SIGNATURE: ………………… STUDENT ID:- DATE: ………………………….. SUPERVISOR: DR. STEPHEN OWUSU AFRIYIE SIGNATURE: ………………….. DATE: ………………………….. ii DEDICATION I dedicate this work to God Almighty for seeing me through this major phase of my life. I further dedicate this work to my family for their support throughout this period, as well as to all my lecturers, who in many ways provided me with their unwavering support throughout this academic pursuit at Ghana Communication Technology University. Nonetheless, with heartfelt appreciation and gratitude, I also dedicate this research study, to the completion of my final year degree pursuit study, and to the pursuit of knowledge, that knows no bounds. iii ACKNOWLEDGMENT I am deeply grateful for the completion of my studies at Ghana Communication Technology University, and Alhamdulillah, I firmly believe that it is only through God's grace that I have been able to accomplish this project. Throughout my study journey, I have witnessed His boundless grace manifested through the support and assistance of numerous individuals. I am sincerely grateful to my supervisor, Dr. Stephen Owusu Afriyie, for his unwavering dedication in guiding me throughout this work. His humble supervision, support, and constructive criticism have been instrumental. I deeply appreciate his guidance and assistance tremendously. I must honestly admit that this Degree program has been a long, demanding, and challenging undertaking. However, I have been able to complete it successfully. Thanks to the unwavering support, I did receive from various sources. I would also like to express my gratitude to my Parent and brother, Alhaji Muhammad Sani (Dan Malikin Jiwa), and Alhaji Muhammad Mukhtar Mujahid, your unwavering support has been a source of strength and motivation throughout my degree journey. Additionally, special thanks go to my esteemed lecturers, including, Dr. Stephen Owusu Afriyie, Dr. Joseph Nkyi, Dr. Joseph Asare, Dr. Gertrude Omoakohene, Mrs. Bright Fergurson, Dr. Esi Mensah, among others. Your guidance and expertise have played an imperative role in my degree program journey. I wish each of you more success and prosperity in all your endeavors. iv ABSTRACT In the context of developing economies like Ghana, poverty remains a pressing and significant obstacle, affecting individuals, households, and communities by depriving them of necessities such as; health care, education, and opportunities for socioeconomic progress. To tackle this issue, micro finance institutions (MFIs) have emerged as a powerful tool to combat poverty by extending financial services to low-income individuals and micro-entrepreneurs who lack access to traditional banking systems. This research study aims to thoroughly explore, examine and evaluate the role of MFIs in poverty alleviation, specifically in the Okaikoi North Municipality, Accra - Ghana. Through an extensive case study, this research examines the diverse micro finance models, products, and services offered by MFIs in the municipality, evaluates their impact on reducing poverty, and identifies the challenges and opportunities they encounter in their operations. The findings of this study underscore the importance of tailored financial services to meet the diverse needs of various demographic groups within the Okaikoi North Municipality. Keywords: Microfinance, Financial Inclusion, Empowerment, Sustainable Development, Economic Growth. v TABLE OF CONTENT DECLARATION..................................................................................................................... II DEDICATION....................................................................................................................... III AKNOWLEDGEMENT........................................ ERROR! BOOKMARK NOT DEFINED. ABSTRACT ............................................................................................................................. V TABLE OF CONTENT........................................................................................................ VI LIST OF FIGURES .............................................................................................................. IX CHAPTER ONE ...................................................................................................................... 1 GENERAL INTRODUCTION .............................................................................................. 1 1.1 BACKGROUND OF STUDY................................................................................. 1 1.2 STATEMENT OF THE PROBLEM ....................................................................... 3 1.3 OBJECTIVES OF THE STUDY ............................................................................ 4 1.3.1 Main Objective: ................................................................................................... 4 1.3.2 Specific Objectives .............................................................................................. 5 1.4 RESEARCH QUESTIONS .................................................................................... 5 1.4.1 Research Questions: ............................................................................................. 5 1.4.2 Hypotheses: .......................................................................................................... 5 1.5 SIGNIFICANCE OF THE STUDY ........................................................................ 6 1.6 SCOPE OF THE STUDY....................................................................................... 7 1.6.1 Geographical Scope: ............................................................................................ 7 1.6.2 Thematic Scope:................................................................................................... 7 1.7 LIMITATIONS OF THE STUDY .......................................................................... 7 1.8 ORGANIZATION OF THE STUDY...................................................................... 8 CHAPTER TWO ................................................................................................................... 10 LITERATURE REVIEW ..................................................................................................... 10 2.0 OVERVIEW .......................................................................................................... 10 2.1 OVERVIEW OF KEY CONCEPTS ..................................................................... 10 2.1.1 Poverty Alleviation ............................................................................................ 11 2.1.2 Microfinance Institutions ................................................................................... 12 2.1.3 Financial Inclusion Strategies ............................................................................ 13 vi 2.1.3.1 Key elements of financial inclusion strategies .............................................. 14 2.1.4 Microfinance Products ....................................................................................... 15 2.1.5 Small-scale Entrepreneurs ................................................................................. 17 2.1.6 Women Empowerment ...................................................................................... 18 2.1.7 Poverty Reduction Strategy ............................................................................... 19 2.1.8 Sustainable Development................................................................................... 20 2.1.8.1 Dimensions of Sustainable Development ................................................... 21 2.1.9 Economic Growth .............................................................................................. 22 2.2 ROLE OF MICROFINANCE IN POVERTY ALLEVIATION ........................... 23 2.3 THEORETICAL REVIEW / FOUNDATION ...................................................... 24 2.3.1 Theories of the causes of poverty ...................................................................... 24 2.3.2 Institutional Theory............................................................................................ 27 2.3.3 Financial Inclusion Theory ................................................................................ 29 2.3.4 Empowerment Theory ....................................................................................... 30 2.3.5 Impact Theory .................................................................................................... 31 2.4 EMPIRICAL REVIEW ......................................................................................... 32 2.5 CONCEPTUAL FRAMEWORK .......................................................................... 34 CHAPTER THREE ............................................................................................................... 36 METHODOLOGY ............................................................................................................... 36 3.1 INTRODUCTION ................................................................................................. 36 3.2 RESEARCH DESIGN ........................................................................................... 36 3.3 RESEARCH APPROACH .................................................................................... 36 3.4 POPULATION, SAMPLE AND TECHNIQUE ................................................... 37 3.5 DATA COLLECTION INSTRUMENT ............................................................... 38 3.6 METHOD OF DATA ANALYSIS/STATISTICAL PROCEDURES .................. 39 CHAPTER FOUR .................................................................................................................. 40 DATA ANALYSIS AND FINDINGS ................................................................................. 40 4.0 INTRODUCTION ................................................................................................. 40 4.1 DEMOGRAPHIC CHARACTERISTICS OF PARTICIPANTS .............................. 40 4.2 INCOME PER MONTH ............................................................................................ 42 4.3 MICROFINANCE USAGE AND PERCEPTION..................................................... 43 4.4.0 IMPACT OF MICROFINANCE ON ECONOMIC DEVELOPMENT ............. 46 vii 4.4.1 MODEL SPECIFICATION ................................................................................. 46 4.4.2 DESCRIPTIVE STATISTICS ............................................................................. 49 4.4.4 CROSS-SECTIONAL DEPENDENCY TEST ................................................... 52 4.4.5 REGRESSION MODEL...................................................................................... 53 CHAPTER FIVE ................................................................................................................... 57 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS ........................................ 57 5.1 INTRODUCTION ................................................................................................. 57 5.2 SUMMARY................................................................................................................ 57 5.3 CONCLUSIONS ........................................................................................................ 58 5.4 RECOMMENDATION .............................................................................................. 60 REFERENCES ....................................................................................................................... 62 APPENDIX ............................................................................................................................. 68 viii LIST OF FIGURES Figure 2.1: Role of Microfinance on Poverty Reduction…………………………………… 24 Figure 2.2: Causal Relationships in Behavioral, Structural and Political Theories of Povert . 27 Figure 2.3: Hierarchical Structure of Institutional Theory ...................................................... 29 Figure 2.4: Microfinance Institutions Impact on Poverty Alleviation ..................................... 35 ix CHAPTER ONE GENERAL INTRODUCTION 1.1 BACKGROUND OF STUDY Poverty is a pervasive and multidimensional issue that affects individuals, families, and communities worldwide. From a report by (Aguilar & Sumner, 2020) using three specifications of multidimensional poverty, the study's findings offer a number of significant insights. “First off, multidimensional poverty shares many traits with monetary poverty, which is defined as surviving on $1.90 per day which is equal to 21.56 cedis, on a worldwide scale. Secondly, when looking at particular places, rural areas show a different pattern of poverty, characterized by several limitations on access to quality infrastructure and education. Surprisingly, urban poverty is more frequently linked to child mortality and malnutrition despite being close to better healthcare and economic possibilities. Lastly, there are major regional differences in the level of multidimensional poverty, with some forms of deprivation frequently overlapping while others do not. This issue of poverty deprives people of necessities such as food, clean water, healthcare, education, and shelter, hindering their socioeconomic development. Thus, poverty is influenced by various factors, including economic, social, and political aspects. To address the challenges faced by impoverished populations, governments, organizations, and communities have implemented various poverty alleviation strategies. These strategies aim to improve living conditions, enhance access to education and healthcare, and empower individuals to break the cycle of poverty. (Yonas, 2015), “It is of great importance to focus on the environmental factors and characteristics and its implications to identify the poor and formulate effective poverty reduction and targeting strategies.” Either community’s members, house heads, etc. characteristics are used as proxies for identifying the ability of the households, and communities, to generate income to cater for the subordinate. Some common strategies 1 include social welfare programs, job creation initiatives, education and skills development, and access to financial services. Microfinance institutions (MFIs) play a crucial role in poverty alleviation. They provide financial services modified to the needs of low-income individuals and marginalized communities. MFIs offer micro-loans, savings accounts, insurance, and other financial products, promoting financial inclusion and empowering individuals economically, by enabling them to engage in income-generating activities, build assets, and improve their overall quality of life. Concisely, MFIs contribute to the overall development of communities. Microfinance has evolved significantly over the years, transitioning from informal moneylenders to formal institutions. International Organizations like the one Grameen Bank (which started the project in 1976) tagged as, ‘Bank for the poor’ and ACCION Microfinance Bank have pioneered the concept and gained global recognition. With their pioneering work, MFIs have grown in number and scale, expanding their services to reach a larger client base. They have also embraced innovative technologies and financial models to enhance their operations and impact on society. Similarly, MFIs have demonstrated their effectiveness in poverty alleviation through various means by providing small loans, they enable micro-entrepreneurs to start or expand their businesses, generating income and employment opportunities. Additionally, MFIs encourage savings and the building of assets, promote financial literacy, and empower women, who often face limited access to financial resources. Furthermore, by offering group-based lending models that encourage collaboration and mutual support, MFIs foster social cohesion and community development. The Okaikoi North is a newly established Municipal Assembly in Ghana, located in the Greater Accra Region. This municipality faces challenges related to poverty, due to the estimated 2 growing population of 291,420 as of 2018, representing 5.7% of the Greater Accra Region's population, with the female population accounting for 51.5% compared to 48.5% of males. In terms of the economy, 70.1% of the population aged 15 and older are economically active, with 93% of them being employed. The purpose of this study is to examine the impact of microfinance institutions in empowering vulnerable communities: A case study of Okaikoi North Municipality's journey towards unveiling opportunities for sustainable poverty alleviation and economic empowerment. The study aims to assess the effectiveness of MFIs in empowering individuals and improving socioeconomic conditions in the local context. To achieve this, a mixed-method research approach is employed, incorporating both qualitative and quantitative data collection methods. By conducting this study, it will aim to contribute to the understanding of the impacts and potentials of MFIs in combating poverty and promoting sustainable development in the Okaikoi North Municipality. 1.2 STATEMENT OF THE PROBLEM The research problem at hand revolves around the role of microfinance institutions in poverty alleviation, with a specific focus on the Okaikoi North Municipality. The primary objective is to investigate the effectiveness of these institutions in addressing poverty and improving the socioeconomic conditions of the local population. The core issue lies in the persistent prevalence of poverty within the Okaikoi North Municipality. A significant portion of the population lacks access to necessities and opportunities for socioeconomic development. This problem can be attributed to various factors, including limited financial resources, inadequate access to formal banking services, and limited entrepreneurial skills and opportunities. 3 Several symptoms indicate the presence of the problem. High unemployment rates reflect the limited job opportunities available to the local population, exacerbating their poverty situation. Additionally, the lack of access to credit and financial services prevents individuals and households from investing in income-generating activities or coping with financial emergencies. Moreover, the absence of sustainable income-generating activities within the community hampers its overall development and well-being, as it perpetuates the cycle of poverty. Despite the presence of microfinance institutions in the Okaikoi North Municipality, there is a research gap regarding their effectiveness in poverty alleviation and the specific challenges they face in achieving their objectives. It is crucial to conduct an in-depth study to explore the actual impact of microfinance institutions on poverty reduction, identify the barriers they encounter, and suggest potential strategies for improvement. By addressing this research gap, this study will contribute to the existing knowledge and understanding of the role of microfinance institutions in poverty alleviation within the Okaikoi North Municipality. The findings from this research will provide valuable insights to policymakers, practitioners, and stakeholders involved in poverty reduction and socioeconomic development. These insights will enable them to formulate effective strategies and interventions that enhance the contribution of microfinance institutions towards poverty reduction and socio-economic development in the municipality. 1.3 OBJECTIVES OF THE STUDY 1.3.1 Main Objective: The main objective of this study is to conduct a broad examination of the role of microfinance institutions in poverty alleviation within the Okaikoi North Municipality. This objective 4 encompasses a broad investigation into the contributions, effectiveness, and challenges of microfinance institutions in addressing poverty in the region. 1.3.2 Specific Objectives The specific objectives will be to: I. To identify the impact of microfinance institutions on poverty reduction in Okaikoi North Municipality. II. To assess the effectiveness of microfinance programs in the Okaikoi North Municipality. III. To explore the challenges faced by microfinance institutions on poverty alleviation within the context of Okaikoi North Municipality. 1.4 RESEARCH QUESTIONS AND HYPOTHESES 1.4.1 Research Questions: I. What is the impact of microfinance institutions in poverty alleviation within the Okaikoi North Municipality? II. What is the effectiveness of microfinance programs in Okaikoi North Municipality? III. What are the challenges faced by microfinance institutions in poverty alleviation efforts? 1.4.2 Hypotheses: H1. Microfinance institutions have a positive impact on poverty reduction in Okaikoi North Municipality. H2. The implementation of microfinance programs in the Okaikoi North Municipality leads to improvements in the socioeconomic conditions of the beneficiaries. 5 1.5 SIGNIFICANCE OF THE STUDY This research makes a valuable contribution to the existing literature by shedding light on the role of microfinance institutions in alleviating poverty. Through a focused examination of the Okaikoi North Municipality, this study provides valuable insights and empirical evidence that enhance users understanding of how microfinance interventions effectively reduce poverty levels. Additionally, the findings of this study have practical implications for policy development and implementation. Policymakers can utilize the research outcomes as a foundation for constructing targeted and evidence-based policies and programs that effectively harness the potential of microfinance institutions to combat poverty in the Okaikoi North Municipality by addressing the specific challenges faced by microfinance institutions, these strategies can enhance their impact on poverty reduction. The significance of this study extends beyond academia to the community, individuals, and stakeholders impacted by poverty in the Okaikoi North Municipality. By gaining a deeper understanding of the role played by microfinance institutions, the research outcomes can guide the development of customized interventions that address the unique needs and circumstances of the local population. This, in turn, can result in improved access to financial services, expanded entrepreneurial opportunities, and overall improved socioeconomic conditions for individuals and households facing poverty. 6 1.6 SCOPE OF THE STUDY 1.6.1 Geographical Scope: The study concentrates exclusively on the Okaikoi North Municipality, taking a close look at how microfinance institutions contribute to poverty alleviation within this specific region. By focusing on the unique context and dynamics of Okaikoi North Municipality, the research aims to provide a detailed case study that offers valuable insights into the local conditions and challenges related to poverty and the role of microfinance interventions. 1.6.2 Thematic Scope: The primary focus of the study revolves around investigating the impact of microfinance institutions on poverty alleviation. It delves deeply into the specific role that these institutions play in addressing poverty within the Okaikoi North Municipality. Through rigorous examination, the research seeks to explore the effectiveness of various microfinance programs and interventions in reducing poverty levels. It analyzes the outcomes of these initiatives and evaluates their overall contribution to enhancing the socioeconomic conditions of the targeted population. 1.7 LIMITATIONS OF THE STUDY Numerous challenges have arisen in the process of gathering relevant data for this study. These challenges arise from limited access to information, concerns about confidentiality, and incomplete records. Additionally, the analysis of the collected data faced limitations due to issues with data quality, missing data points, and the complexity of the statistical methods employed. These constraints potentially influence the breadth and accuracy of this study’s findings, as they limit the researchers' ability to obtain complete results. 7 Similarly, the scope of the study is limited to Okaikoi North Municipality, which means the findings may not be directly applicable or generalized to other regions or contexts. The availability of data from Microfinance institutions in correspondence to poverty alleviation efforts was also restricted affecting the depth and breadth of the researcher’s analysis. Additionally, the sample size of the study, influenced by practical considerations or resource constraints, may also influence the statistical power of the findings. Therefore, caution must be exercised when attempting to generalize the study's results beyond the specific context of Okaikoi North Municipality. Inclusively, financial constraints had a substantial impact on all aspects of the data collection process for this study, limiting the researcher’s capacity to conduct extensive interviews and access remote areas for thorough and comprehensive data gathering. In light of this restriction, the study's sample size was limited, which directly influenced the accuracy of the findings and limited the study's ability to provide an in-depth understanding of the complicated relationship between microfinance institutions and poverty alleviation in the targeted Okaikoi North Municipality. 1.8 ORGANIZATION OF THE STUDY This Project encompasses five (5) comprehensive and detailed chapters. Each chapter contributes uniquely to the overall understanding of the research topic and presents valuable insights that build upon one another, creating a cohesive and informative body of work. Chapter One: The general introduction introduces the research topic, outlines objectives, and establishes the research's context and rationale in which it is conducted. It also introduces the research questions that will guide the study, forming the basis for the exploration and analysis that follows. 8 Chapter Two: The literature review critically examines existing scholarly works, theories, and empirical studies on microfinance institutions' role in poverty alleviation. This critical analysis of the literature helps identify gaps and trends in the field, shaping the research approach and providing a theoretical framework for the study. By reviewing and synthesizing relevant literature, this chapter establishes a foundation of knowledge that informs and enriches the subsequent chapters. Chapter Three: The methodology details the research design, data collection methods, and analysis techniques. This transparent explanation ensures credibility and replicability, supporting the study's validity. Chapter Four: The findings and analysis present empirical evidence derived from collected data. Key findings, trends, and patterns are showcased using appropriate statistical or qualitative analysis methods. The use of visual aids, such as charts, graphs, and tables, enhances the clarity and accessibility of the findings, allowing readers to grasp the insights with ease. Chapter Five: The conclusion and recommendations comprehensively discuss the research findings, their interpretations, and implications in relation to objectives and questions. Conclusions are derived based on the evidence presented in previous chapters. While recommendations for future research and practice are suggested to promote microfinance institutions interventions. The chapter also concludes, by summarizing the main findings, emphasizing their significance, and highlighting the research's contribution to existing knowledge. 9 CHAPTER TWO LITERATURE REVIEW 2.0 OVERVIEW This chapter provides a comprehensive review of the existing literature on the role of microfinance institutions (MFIs) in poverty alleviation, with a specific focus on the case study of the Okaikoi North Municipality. The literature review aims to explore the key concepts related to microfinance and poverty alleviation, examine the theoretical frameworks that underpin the relationship between microfinance and poverty reduction, review empirical studies that have investigated the impact of MFIs on poverty alleviation, and present a conceptual framework that guides the present study. 2.1 OVERVIEW OF KEY CONCEPTS By defining the key concepts such as ‘microfinance institutions’ and ‘poverty alleviation’, this aspect examined the characteristics, functions, and types of microfinance institutions, including their services, target beneficiaries, and operational models. Furthermore, it explored the concept of poverty alleviation, considering its multidimensional nature and the various indicators used to measure poverty levels. However, the establishment of a conceptual framework focused on providing a solid foundation for this research study. This helps guide the study analysis and interpretation of the role of microfinance institutions in poverty alleviation in Okaikoi North Municipality, also enabling us to draw meaningful conclusions and make informed recommendations. The conceptual framework enhances future readers' understanding of the complex dynamics and factors involved, contributing to the existing knowledge on microfinance interventions and their potential to alleviate poverty. 10 2.1.1 Poverty Alleviation Poverty alleviation encompasses a range of strategies to reduce and eliminate poverty. It involves actions that aim to improve living conditions and well-being for individuals and communities experiencing poverty. It focuses on addressing the root causes of poverty and creating opportunities for individuals to break free from deprivation. Thus, poverty is a complex issue, extending beyond lack of financial resources to inclusion in limited access to education, healthcare, clean water, food, and housing. Mahadevan & Viet‐ Ngu (2016) found that “chronic poverty and not transient poverty has a detrimental effect on multidimensional deprivation and thus current poverty alleviation programs should potentially be tailored according to these poverty types to effectively combat multidimensional deprivation”. However, to tackle poverty, different approaches have to be employed. For example, social safety like cash transfers or subsidies ensures basic needs are met for those in extreme poverty. Education and skill-building programs play a crucial role by equipping individuals with knowledge and tools for stable employment and higher earning potential. Efforts in poverty alleviation also emphasize inclusive economic growth and sustainable livelihoods. This involves supporting entrepreneurship, and small-scale businesses, and improving access to financial services through micro finances. Research states that “there are differences in poverty alleviation effects of inclusive financial development among the poor with different labor capacities; (i) If financial institutions target the service precisely to the working-age population in rural areas, they will achieve the dual goals of maintaining institutional sustainable development and alleviating poverty. (ii) Also, the development of inclusive finance in aspects of permeability, usability, and utility can significantly reduce multidimensional poverty”. (Yanlin & Chenyu, 2019). Thus, economic 11 empowerment allows individuals to support themselves and their families, breaking the cycle of poverty. Nevertheless, poverty alleviation is a shared responsibility involving governments, civil society organizations, international institutions, and communities. According to an evidence finding “to strengthen the existing poverty alleviation strategies and ensuring good management could be one major way towards the effective performance of existing poverty alleviation programs” (Taiwo & Edwin, 2016). It requires addressing systemic issues, advocating for social justice, and providing equal opportunities for all individuals regardless of their socioeconomic background. Concisely, the goal of poverty alleviation is to create a world where everyone can lead a dignified life free from the hardships of poverty. A comprehensive approach is needed, considering the multidimensional aspects of poverty while promoting sustainable development and social inclusion. By investing in poverty alleviation, societies can work towards a more equitable and prosperous future for all. 2.1.2 Microfinance Institutions Microfinance institutions are specialized organizations that offer financial services to individuals and communities with limited access to traditional banks. Their main objective is to empower marginalized individuals by providing them with small loans, savings accounts, insurance, and other financial products. The primary aim of microfinance institutions is to promote financial inclusion and empower individuals to uplift their lives and escape poverty. “Microfinance represents a vehicle for the promotion of financial inclusion in Nigeria and should remain at the core of the pursuit of financial participation across all income levels” (Ogechi & Evans, 2017). They specifically 12 target those who are typically excluded from mainstream financial services, including lowincome individuals, small-scale entrepreneurs, and women. Microfinance institutions operate based on the principles of financial sustainability while also prioritizing social impact. Their goal is to bring about positive social change by facilitating access to capital and financial services that can assist individuals in starting or expanding their businesses, investing in education, healthcare, housing, and building financial resilience. A key distinguishing feature of microfinance institutions is their emphasis on building strong relationships with their clients. They not only provide financial assistance but also offer training in financial literacy, business mentoring, and other forms of support to enhance the financial capabilities of their clients. By promoting entrepreneurship, creating employment opportunities, and fostering local economic growth, microfinance institutions play a pivotal role in driving economic development. They enable individuals to become self-reliant, make meaningful contributions to their communities, and break the cycle of poverty. It is important to acknowledge that ongoing debates and discussions surround the impact and effectiveness of microfinance institutions. “Smaller microfinance institutions maintain genuine objective to serve the poor, as they grow larger they would be more inclined toward sustainability objectives” (Luqman et al., 2019) Critics raise concerns about high-interest rates, over-indebtedness, and inadequate consumer protection measures that may pose risks to borrowers. 2.1.3 Financial Inclusion Strategies Financial inclusion strategies encompass a set of actions and approaches to enable individuals and communities to access affordable and suitable financial products and services. The 13 objective is to establish an inclusive financial system, allowing everyone to participate and benefit, regardless of his or her socioeconomic background. Financial inclusion recognizes the importance of accessing financial services for managing finances, saving, investing, and mitigating risks. It extends beyond mere possession of a bank account and includes a range of financial products like loans, insurance, payment systems, and investment opportunities. These strategies specifically target underserved populations, including low-income individuals, rural communities, women, and marginalized groups who face obstacles in accessing traditional financial institutions. A report by (Bappaditya & Sambit, 2011) argues that, “instead of focusing on financial inclusion as a process, it is better to focus on instruments and institutions that will promote financial inclusion”. Thus, it seeks to bridge this gap by providing innovative solutions tailored to their unique needs and circumstances. 2.1.3.1 Key elements of financial inclusion strategies I. Expanding physical and digital infrastructure: This involves extending the reach of financial services to remote areas by improving the availability and accessibility of banking facilities, including physical branches, ATMs, and digital banking platforms. II. Simplifying the account opening process: Simplifying the procedures and requirements for opening bank accounts enables individuals, especially those from demeaned communities, to easily access formal financial services and become part of the banking system. III. Promoting financial literacy and education: Educating individuals about financial concepts, products, and services is crucial for enabling informed decision-making and responsible financial behaviour. Financial literacy programs help individuals understand how to manage their money, save, invest, and protect themselves from financial risks. 14 IV. Developing appropriate products and services: Designing financial products and services that cater to the specific needs and preferences of underserved populations is essential. These products should be affordable, accessible, and tailored to address the unique challenges and circumstances faced by marginalized individuals and communities. V. Implementing consumer protection measures: Ensuring the fair treatment of consumers is vital in building trust and confidence in the financial system. Consumer protection measures to safeguard individuals from fraudulent practices, promote transparency and establish mechanisms for resolving disputes and complaints. Governments, financial institutions, and stakeholders adopt financial inclusion strategies to empower individuals, enhance economic opportunities, and reduce inequality. “The identification of individual characteristics that could affect financial inclusion provides useful empirical evidence for designing policies that promote more inclusive financial systems” (Cámara et al., 2015). It is also believed that, when people have access to formal financial services, they can better manage their finances, invest in education and healthcare, and actively engage in economic activities. However, it is important to ensure responsible and sustainable implementation of financial inclusion strategies. Adequate regulations and oversight are necessary to safeguard consumers from predatory practices, promote fair and transparent financial systems, and maintain stability and integrity in the financial sector. 2.1.4 Microfinance Products Microfinance products are specialized financial services designed to meet the needs of individuals and communities who lack access to traditional banking systems. These products are tailored to address the specific financial challenges faced by belittled individuals, aiming to empower them economically. 15 Microfinance institutions offer a variety of products that cater to the unique circumstances and requirements of their clients, such as small loans, savings accounts, insurance options, and other financial instruments. Although there are related challenges of untimely disbursement and repayment of some of these products, a report by Anane et al. (2013) suggests that, “recipients of microfinance products and services are better off in terms of enhancing the activities of their SMEs, improving outputs and ensuring prudent financial management than those without microfinance services”. However, their objectives are to provide individuals with the necessary resources to start or expand their businesses, invest in education, healthcare, and housing, and develop financial resilience. An essential characteristic of microfinance products is their accessibility. They are specifically designed to be easily attainable by individuals who may not meet the stringent criteria of traditional banks, such as collateral or an established credit history. Microfinance institutions consider the social and economic context of their clients, offering flexible terms and conditions. Microfinance products also prioritize financial education. Clients receive training and support in financial literacy to enhance their knowledge of money management, budgeting, and informed financial decision-making. This empowers them to optimize the financial services available and improve their overall financial well-being. These products play a significant role in poverty alleviation as they provide individuals with opportunities to generate income, build assets, and enhance their living conditions. By granting access to capital and financial services, these products enable individuals to achieve selfreliance, create employment prospects, and contribute to local economic growth. Nevertheless, similarly to this study, it is important to acknowledge that debates persist regarding the impact and effectiveness of microfinance products. Critics raise concerns about 16 high-interest rates, over-indebtedness, and the necessity for stronger consumer protection measures to safeguard borrowers' well-being. 2.1.5 Small-scale Entrepreneurs Small-scale entrepreneurs are individuals who operate businesses on a modest scale, often as independent and self-employed individuals. They manage their enterprises with limited resources and usually have a small number of employees, if any. These entrepreneurs play a significant role in various sectors, such as retail, services, crafts, and agriculture, contributing to job creation, economic growth, and innovation. Their focus is typically on local or community-based businesses, catering to the needs of their immediate surroundings. “Ethnic entrepreneurs, however small their venture, contribute to the economic growth of their local area, often rejuvenate neglected crafts and trades, and participate increasingly in the provision of higher value-added services in their communities” (Rath & Swagerman, 2011) unlike large corporations. They possess a deep understanding of their target market and establish personal connections with their customers. In the same context, small-scale entrepreneurs face distinct challenges, including limited access to capital, market competition, and a lack of resources and infrastructure. Nevertheless, they exhibit resilience, creativity, and adaptability when overcoming these obstacles. They are known for their ability to find innovative solutions and maximize their limited resources. They serve as driving forces in local economies, fostering entrepreneurship, and contributing to the social fabric of their communities. “Entrepreneurs that take part in all kinds of smallscale ventures and by being granted access to additional opportunities and introductions to new customers by senior managers of established companies based on their originality, creativity and energy, the young entrepreneurs acquire the experiences and the contacts they need for their next entrepreneurial step” (Hulsink & Koek, 2014). They generate employment 17 opportunities, support local suppliers and services, and contribute to community development. Additionally, small-scale entrepreneurs play a significant role in preserving cultural traditions and promoting local products and artistry. In conclusion, supporting and empowering small-scale entrepreneurs is essential for fostering inclusive economic growth and reducing poverty. Access to financial services, business training, mentorship, and supportive policies can enhance their chances of success and sustainability. By providing opportunities and resources, societies can harness the potential of small-scale entrepreneurs, creating an environment conducive to their growth and prosperity. 2.1.6 Women Empowerment Women empowerment encompasses granting women equal rights, opportunities, and resources to enable them to exercise their agency and participate fully in all aspects of life. It involves recognizing and challenging the systemic gender inequalities and discrimination that hinder women's progress. This includes addressing issues such as gender-based violence, unequal pay, limited education, and restricted healthcare access. Promoting women’s empowerment entails advocating for gender equality, challenging societal norms and stereotypes, and ensuring women's voices are heard in decision-making processes. Empowered women contribute to economic growth, social development, and the well-being of their families and communities. However, achieving women's empowerment requires collaborative efforts from governments, civil society, the private sector, and communities through policies that protect women's rights, provide education and healthcare access, and foster an inclusive environment. “The empowerment of women in a male-driven society will ideally redefine gender constructs and bring forth social, cultural, and political changes that will promote gender equality, women’s well-being, and a healthier society” (Denmark et al., 2017). 18 2.1.7 Poverty Reduction Strategy A poverty reduction strategy is a holistic and inclusive plan designed to combat poverty by addressing its root causes and improving living conditions. It encompasses a wide range of policies, programs, and initiatives tailored to the specific region or country. The ultimate objective of a poverty reduction strategy is to foster a society where every individual can enjoy a dignified life free from the hardships of poverty. In Cogent Economics & Finance Journal, findings suggest that “the policies for poverty reduction should aim at improving the access of the poor to education including other non-farm employment opportunities (Nguyen, 2019). Typically, a poverty reduction strategy comprises various interconnected components. These may involve measures to stimulate economic growth and employment opportunities, such as facilitating entrepreneurship, supporting small-scale enterprises, and attracting investments. Nonetheless, social safety is prioritized providing aid and assistance to those experiencing extreme poverty through mechanisms like cash transfers and subsidies. Education and skill development programs are important in poverty reduction strategies. By equipping individuals with knowledge and empowering them with skills for stable employment and improved earning potential, these initiatives enable them to break free from the cycle of poverty. A Journal of Sustainable Development, which was Analyzing poverty in Nigeria through theoretical lenses (Danaan, et al., 2018) argued and finalized that, “poverty reduction is realizable by empowering people to develop resilience to cope and overcome it within the scope of their resources and capabilities”. Additionally, these strategies emphasize social inclusion and address inequalities and discrimination based on factors such as gender, race, ethnicity, and disability. It aims to ensure that all individuals, irrespective of their socioeconomic background, have equal access to opportunities and resources. 19 However, for it to be effective, it requires collaboration and coordination among diverse stakeholders, including governments, civil society organizations, international institutions, and local communities. The study ‘Poverty Reduction and the Attainment of the Millennium Development Goals in Nigeria: Problems and Prospects’ (Adejuwon & Tijani, 2012) conclude that the government and able bodies at various levels must come up with genuine poverty reduction program if the challenges of poverty must be tackled. They should necessitate the establishment of clear targets, ongoing monitoring of progress, and evaluation of the impact of interventions to ensure effectiveness and long-term sustainability. 2.1.8 Sustainable Development Sustainable development is a concept with enlisted goals that aim to meet the needs of the present generation while preserving the ability of future generations to meet their own needs. It emphasizes integrating economic growth, social progress, and environmental protection to create a balanced and resilient society. At its core, sustainable development recognizes the interconnection of economic, social, and environmental factors. Hatthachan (2013), proves that “sustainable development is a fair combination of three main factors of development; economic growth, social development, and environmental protection, under the condition that economic growth is distributed to all the population, through poverty reduction, minimizing inequality in society, and maintaining a good condition of the environment and natural resources”. Thus, it seeks solutions that promote long-term human well-being while considering the impact on natural resources, ecosystems, and the overall health of the planet. 20 2.1.8.1 Dimensions of Sustainable Development The sustainable development dimensions/three pillars/bottom lines are widely recognized as the core components of sustainable development and are the foundation of many sustainability frameworks and initiatives. These are:  Economically sustainable development, involves fostering inclusive and equitable growth that provides opportunities for all individuals and ensures prosperity. It promotes sustainable business practices, innovations, and responsible consumption and production.  Social sustainable development focuses on improving the quality of life for all humans, addressing poverty, inequality, and social justice. It emphasizes access to education, healthcare, clean water, and sanitation, and empowers marginalized communities while promoting gender equality.  Environmental sustainable development, aims to protect and conserve natural resources, ecosystems, and biodiversity. It encourages renewable energy sources, efficient resource management, waste reduction, sustainable agriculture, and responsible land and water use. Nonetheless, embracing sustainable development allows societies to achieve long-term prosperity while safeguarding the planet for future generations. Modelling sustainable development: India’s strategy for the future (Rajul & Roma, 2012) study reports findings show that,” sustainable development is achievable if the nation emphasizes strategic goals and mission because sustainable development is driven by the strategic parameters such as (employment creation and long-term economic goals)”. Therefore, striving to strike a balance between economic progress, social well-being, and environmental conservation, human participation, ensuring a sustainable and harmonious future for all. 21 2.1.9 Economic Growth Economic growth is the growth of an economy's production and consumption of goods and services. It reflects the economy's ability to generate wealth and improve living standards. Factors such as investment, technology, entrepreneurship, and favorable policies drive economic growth. Economic growth benefits individuals, businesses, and society by creating jobs, reducing unemployment, and increasing incomes. This enables people to afford better housing, education, healthcare, and other necessities, improving their quality of life. Moreover, economic growth fosters innovation, productivity, and competitiveness, and attracts investments. According to a government policy study in Indonesia on human capital, institutional economics, and entrepreneurship as drivers for quality and sustainable economic growth (Prasetyo & Kistanti, 2020), it is found that “the policy implication is that high-quality and fundamentally sustainable economic growth must be built on the four main pillars: human capital, social capital, institutions, and entrepreneurship”. However, this approach aims to be more successful in reducing development problems such as unemployment, poverty, and income inequality and allows businesses to expand, generate profits, and contribute to development. Increased economic activity generates tax revenues for governments to invest in infrastructure, social welfare, and public services. However, economic growth can bring challenges like income inequality and environmental degradation. It is important to pursue sustainable and inclusive growth that considers social and environmental factors for long-term well-being and prosperity. Governments and policymakers play an important role in promoting economic growth through strategies that encourage investment, innovation, trade, and entrepreneurship. They aim to create a favorable business environment, ensure stability, and foster diversification. 22 “Productive and active entrepreneurship contributes to economic growth” (Bosman et al., 2018). 2.2 ROLE OF MICROFINANCE IN POVERTY ALLEVIATION The contribution of microfinance institutions to poverty alleviation in Okaikoi North Municipality and other regions in Ghana extends to providing a spectrum of support to individuals and communities with limited income. This support encompasses both financial and non-financial assistance, with financial support primarily involving services like Micro: credit provision, savings, insurance, leasing, and remittances. On the other hand, non-financial support includes activities such as financial education, training, guidance, and advisory services. Research conducted in this field consistently shows that microfinance beneficiaries often utilize these financial and non-financial services concurrently to establish or enhance microenterprises or for personal consumption. This utilization often results in a decrease in their poverty levels. Consequently, the profits generated from these activities contribute to the increase in the income of microfinance beneficiaries, enabling them to improve their consumption patterns, accumulate assets, and build up their savings. In essence, microfinance has the potential to address both monetary and non-monetary aspects of poverty. Another significant role played by microfinance institutions is bridging the financial gaps in the municipality. To achieve this, they employ various strategies such as enhancing access to the formal financial system, creating a conducive environment for business growth, expanding financial resources through non-financial private sector involvement, and assisting small and medium-sized enterprises (SMEs) in meeting the requirements for formal financing. However, this multifaceted approach helps narrow the financial gap and empowers individuals and businesses to access the resources they need for growth and development. 23 Figure 2.1: Role of Microfinance on Poverty Reduction Source: Adapted from Fuseini, Enu-Kwesi, and Sulemana (2019) 2.3 THEORETICAL REVIEW / FOUNDATION In this section of the study, the literature review includes a highlight of the various theories that applied to the research topic, including theories of the causes of poverty, institutional theory, financial inclusion theory, and empowerment theory. 2.3.1 Theories of the causes of poverty The theories of the causes of poverty or frameworks primarily relate and are categorized into three broader families of theories: behavioral, structural, and political due to the lack of debates between the frameworks for the theories of poverty. However, it is important to note that this theory focuses on the causes and not the effects and that poverty simply co-exists because of a shortage of resources relative to human needs. The behavioral perspective focuses on 24 individual behaviours, the structural bearing focuses on the demographic and labor market context, and the political prospect focuses on power and institutions.  The behavioral perspective of poverty focuses on individual behaviors as the primary cause of poverty. It suggests that factors such as personal choices, incentives, and cultural norms play a significant role in perpetuating poverty. The concept also examines how behaviors such as low educational attainment, unemployment, or single parenthood can contribute to or lead to poverty.  The structural aspect emphasizes the role of social and economic structures in causing poverty. This theory argues that factors such as income inequality, lack of access to education and healthcare, discrimination, and limited job opportunities contribute to poverty. Structural theory highlights how societal and systemic factors shape individuals' economic outcomes. Most literature, if not all, concentrates on urban disadvantage, rural effects, showing how deindustrialization, and skill /spatial mismatches cause joblessness, family change, and poverty. The prominent structural explanation for poverty in developing countries is that economic development reduces poverty by creating jobs, enabling access to and returns to schooling, encouraging urbanization, better health, and lower fertility. Contrary to rich democracies, structural changes like deindustrialization and rising female labor force participation influence poverty, and individual-level employment is consistently one of the most powerful predictors of poverty. However, structuralism is presently confronting three challenges: first, the need to demonstrate that structure causes behavior and behavior causes poverty, and second, there is a lack of coherence among the various authorities under the structural purpose and movement. However, the problem may be that the effects of structures appear to vary across time, place and that politics and institutions may moderate whether, and how structures cause poverty. 25  The political aspect focused on the role of power dynamics and political institutions in causing poverty. It argues that policies and decisions made by governments and other political actors have the potential to either alleviate or perpetuate poverty. It also examined how factors such as social welfare programs, labor market regulations, and resource distribution influences poverty levels. Desmond & Western (2018) in their study report neglected political explanations and emphasized micro-level relations over macro-level power and institutions. Nevertheless, power resources theory contends that collective political actors mobilize less advantaged classes around shared interests and ideology, and then form labor unions, elect Left parties, and expand the welfare state. In rich democracies, poverty is lower when Left parties have control of the government, unionization is higher, and women have a greater share of parliaments. The causes of the theories of poverty explain poverty as deeply fragmented, and there is too little interdisciplinary and international conversation. The lack of theory undermines all study's cumulative progress toward understanding poverty, as researchers most often reinvent the wheel, talk past each other, and overlook how their work builds on that of others. Nevertheless, communities, regions, states, or countries shape poverty by organizing the distribution of resources, insuring against risks, investing in capabilities, allocating opportunities, socializing normative expectations, and disciplining the poor. There are several emerging developments in the welfare regions/countries, including a growing interest in how social policies moderate the behavior-poverty link and a growing interest in how "disciplining institutions" constrain the poor. 26 Figure 1.2: Causal Relationships in Behavioral, Structural and Political Theories of Poverty Source: David Brady (2019) 2.3.2 Institutional Theory The institutional theory focuses on the role of formal and informal institutions in terms of rules, norms, and practices in shaping the operational functions and impact of MFIs. This theory examines how regulatory frameworks, legal systems, governance structures, and decisionmaking affect the performance and effectiveness of microfinance initiatives in poverty alleviation. By considering formal institutions, such as government policies and regulations, and informal institutions, such as cultural practices and social norms, the institutional theory sheds light on the complex dynamics that shape the functioning and impact of MFIs. It recognizes that the external environment in which MFIs operate, characterized by different institutional arrangements, can greatly influence their ability to serve the needs of impoverished individuals and communities. According to a study conducted by Siwale (2017), which involved, in-depth interviews with regulators from Central Banks, apex microfinance associations, MFI managers, and practitioners, the report reveals that the regulations implemented in both countries have 27 successfully contributed to the professionalization of the microfinance sector. Still, their impact on prioritizing social goals within microfinance and MFIs is uncertain. In this paradigm, regulatory frameworks and legal systems play an important role in determining the scope of microfinance operations, the level of supervision and accountability, and the provision of financial services to marginalized populations. The governance structures within MFIs, including board structures and decision-making processes, can affect their strategic direction, risk management practices, and overall effectiveness in poverty alleviation. Nevertheless, this institutional theory offers significant insights into how these institutional factors interact and shape the practices and outcomes of MFIs. In a study report by MarkeyTowler (2018), the theory presented in the study offers a fresh perspective on the evolution of institutions. It suggests, “Institutional evolution arises from the Micro-dynamics of ideas evolving and competing in the public sphere”. This new understanding provides a solid basis for the field of institutional theory. It acknowledges that the success of microfinance initiatives in reducing poverty is not solely dependent on their internal operations, but also on the broader institutional context in which they operate. Hence, understanding the significance of institutions in the context of microfinance becomes imperative for policymakers, practitioners, and researchers. It underscores the importance of establishing regulatory frameworks that provide support, implementing effective governance mechanisms, and ensuring decision-making processes that align with the objectives of MFIs to amplify their impact in combating poverty. Through the examination of the interplay between institutions and microfinance, Stakeholders and Governments can pinpoint areas that require enhancements, devise suitable interventions, and foster an enabling environment conducive to sustainable efforts in alleviating poverty. 28 Figure 2.2: Hierarchical Structure of Institutional Theory Source: Florine M. et al (2021) 2.3.3 Financial Inclusion Theory The financial inclusion theory highlights the importance of providing access to financial services and products to marginalized and low-income individuals to improve their socioeconomic well-being and reduce poverty in society. However, various research studies offer valuable insights into the different aspects of financial inclusion, poverty alleviation, and the role of microfinance institutions in society. These are as follows: Kuriakose (2015) conducted a study, to understand financial inclusion within the broader context of human development. Focusing on how increased access to financial services broadens people's options and improves their economic and social stability. The study highlighted a shift in the theory of change related to poverty finance, emphasizing the significance of financial intermediaries in reducing poverty rather than focusing solely on income generation. In the same context, the research examined the specific emphasis on promoting cashless payment systems as a means to foster financial inclusion. Garca (2019) also analyzed the financial inclusion of women and its connection to empowerment in Mexican society. The study results drew attention to the fact that official statistics indicate low levels of women's bank account ownership (39%) and credit card usage (25%), highlighting the strong dependency of women on men regarding financial matters. 29 Correlatively, the research delved into the implications of this gender disparity and its impact on women's financial inclusion and empowerment. Whereas, Supramono (2020) used the Technology Acceptance Model (TAM) and Theory of Interpersonal Behavior (TIB) to examine the factors influencing the behavior of SABBS (Savings and Basic Banking Services) users. The purpose of the study was aim to learn more about the factors influencing user behavior and the acceptability and use of SABBS. In addition, Kamdjoug et al. (2021) report study sought to determine the factors affecting Cameroonian consumers' adoption of M-banking apps. Their study analyzed economic theory and focused on how people prioritize reducing consumption to maximize utility and seek financial services, particularly savings choices, based on their income levels. The study also looked at how geographic, social, and economic factors affected formal financial inclusion. Above all, the enlisted research study offers innovative viewpoints on how microfinance organizations might help reduce poverty. They examine a variety of topics, including user behaviour, financial aspects of territorial economic expansion, women's empowerment, actornetwork theory in agenda-setting and financial inclusion in the context of human development. Utilizing their information enables the Authors of this study to do a thorough investigation of the impact that microfinance plays in reducing poverty in the particular Okaikoi North Municipality. 2.3.4 Empowerment Theory Empowerment theory is a concept that focuses on increasing the capabilities of individuals and groups to make choices and take actions that lead to desired outcomes. It involves a transformative process that enables individuals to have control over their lives and utilize their immediate environment for sustainable improvement. 30 Microfinance is often discussed in empowerment theory as it can serve as a tool for community empowerment and poverty reduction. This theory emphasizes grassroots participation in decision-making processes, as opposed to centralized development policies. It recognizes the importance of active involvement from underprivileged individuals in achieving sustainable development and poverty reduction. However, the empowerment theory is people-centred and aims to address the needs of the poor by leveraging their initiatives, potentials, and capabilities. It opposes the top-down approach to development and advocates for the creativity and mobilization of women for personal and community development. One essential aspect of empowerment theory suggests that employers can empower their employees by sharing important information with them. This free exchange of ideas and information can make employees feel appreciated and important, leading to empowerment. However, it is important to consider the potential risks associated with sharing confidential and security-related data with unauthorized parties. 2.3.5 Impact Theory On the contrary, impact theory is a key aspect when examining the role of microfinance institutions in poverty alleviation. The study of Ghalib (2015) reveals that Microfinance programs had a positive impact on the participating households from their Empirical Evidence on Rural Pakistanis. However, understanding microfinance impacts involves assessing the extent to which these institutions bring about positive changes in the lives of individuals and communities, considering the broader socio-economic outcomes, such as generating employment slots, income growth, and economic development within communities. Notably, this theory aims to assess the direct and indirect effects of MFIs on poverty alleviation. It explores how access to financial services and products can empower individuals, enhance their capabilities, and improve their overall well-being. Additionally, this theory also considers the long-term sustainability and scalability of microfinance programs. It helps in identifying the 31 factors that contribute to successful outcomes, as well as the challenges and limitations faced by microfinance institutions. 2.4 EMPIRICAL REVIEW In this empirical review, this study analyzes and explores the findings of two existing literatures: 'The Impact of Microfinance Institutions on Poverty Alleviation' and 'The Roles and Performance of Sustainable Microfinance Institutions'. Thus, analyzing and synthesizing these existing studies helps provide a comprehensive understanding of the effectiveness and significance of microfinance institutions in promoting sustainable development and reducing poverty levels. Chikwira et al. (2022) studied the impact of microfinance institutions on poverty alleviation. This investigation highlights the objective of microfinance institutions (MFIs) to provide credit to the poor and marginalized to improve their socio-economic well-being and reduce poverty. However, the effectiveness of this microfinance institution in achieving poverty alleviation goals is still questionable. one finding mentioned in the literature is the positive relationship between microfinancing growth and poverty reduction in different regions. This finding suggests that as microfinance institutions expand, poverty levels decrease. However, it also raises concerns about the reality of poverty increasing alongside the growth of microfinance institutions in several African countries. This contradiction challenges previous findings and questions the effectiveness of microfinance in poverty reduction. Moreover, pointed out, that poverty statistics are higher among rural dwellers and are more feminized due to factors such as low levels of education, health, and unpaid work in the agriculture sector. This highlights the need for targeted interventions to address the specific challenges faced by these marginalized groups. 32 The researchers also debated that, although some studies argue that microfinancing is a necessary but not sufficient tool for poverty alleviation. They suggest that while microfinance can provide access to financial services for the poor, it may not address the underlying causes of poverty, such as lack of education and skills among the target groups. Additionally, the study also mentions the potential diversion of valuable aid money to untested and non-viable microfinance programs, which could hinder important activities such as education and health. This raises concerns about the allocation of resources and the need for careful evaluation of microfinance programs to ensure their effectiveness in poverty reduction. The potential impact of Foreign Direct Investment (FDI) on poverty reduction through the creation of employment opportunities for unskilled workers and the poor. Highlighting the importance of considering multiple factors and approaches in addressing poverty, including both microfinance and FDI. Despite the valuable insights provided by this study, certain limitations need acknowledgement. Firstly, the analysis primarily focused on the total loans provided by MFIs and their impact on poverty levels, without considering the specific sectors or beneficiaries of microfinancing services. This limitation restricts the comprehensive understanding of the effectiveness of microfinancing in different contexts. Moreover, the study was conducted in specific regions, such as Zimbabwe and African countries, which may limit the generalizability of the findings to other geographical locations. Additionally, the presence of a large informal sector in Zimbabwe poses challenges in measuring the access to informal financial services, which could have influenced the results. Pagalung (2019) delved into the role and performance of sustainable microfinance institutions (MFIs). This study focuses on the development of microfinance in Indonesia, particularly in the provinces of South and West Sulawesi. The research design allows for a firsthand 33 understanding of the challenges and opportunities encountered by MFIs in the region. The study findings highlight the success of Grameen Bank's microfinance model, pioneered by Muhammad Yunus in Bangladesh, as a potential development model for microfinance institutions. The model emphasises trust-based lending rather than collateral or contracts, which has proven effective in poverty reduction. Additionally, the study identifies the importance of incorporating local wisdom and cultural values into microfinance management models to enhance their impact on poverty alleviation. However, the limitations of the study, such as the narrow geographical focus and limited sample size, raise questions about the generalizability and representativeness of the study findings. Advising, future researchers to aim to address these limitations by conducting larger-scale studies across diverse regions and incorporating a more comprehensive analysis of financial performance. 2.5 CONCEPTUAL FRAMEWORK The overall objective of this study is to investigate the impact of microfinance institutions and their influential efforts in alleviating poverty, to provide the link and complete the potential examination between the MFIs and poverty alleviation, with a focus on independent variables such as MFIs Products and Services, Access to Credit, etc. This conceptual framework is developed to assist in analyzing the study data and understanding how these variables influence the dependent variable of poverty alleviation and the mediating variables. 34 Independent variables     Dependent variables MFIs Products & Services Access to Credit Financial Literacy Institutional Structure      Poverty levels Livelihood opportunities Government policies and supports Local economic conditions Entrepreneurial skills Mediating Variables Figure 2.3: Microfinance Institutions Impact on Poverty Alleviation Source: Authors’ Construct 35 CHAPTER THREE METHODOLOGY 3.1 INTRODUCTION The methodology for the study "The Role of Microfinance Institutions in Poverty Alleviation: A Case Study of Okaikoi North Municipality" is discussed in this chapter. The study setting/organizational profile, study design, research approach, population, sample size, data collection tools, data source, method of data analysis and statistical techniques are all concealed. 3.2 RESEARCH DESIGN Polit & Hungler (1999) described research design as a blueprint or outline for conducting a study in such a way that maximum control was exercised over factors that could interfere with the validity of the research results. This study adopted a descriptive research design because the research aims to systematically obtained information to describe what is prevalent concerning the underlined study. This design was best for examining the part that microfinance institutions play in reducing poverty in the Okaikoi North Municipality. This structure makes it possible to have a thorough awareness of the state of affairs and the methods used by microfinance organizations to combat poverty in the chosen region. A thorough analysis was produced using both qualitative and quantitative data collection techniques. 3.3 RESEARCH APPROACH A comprehensive analysis is provided by the research design, which combines qualitative and quantitative data collection techniques. By combining data from many sources, this method increases the validity and reliability of the study’s conclusion. It also makes it easier to grasp the intricate connections and workings of the mechanisms that underlay the contribution of microfinance organizations to the reduction of poverty. 36 Deep interviews with key stakeholders, including microfinance clients, non-clients, staff from microfinance institutions, and local authorities are conducted as part of the qualitative component of the research design. Participants' experiences, viewpoints, and perceptions of the role of microfinance in eradicating poverty were investigated using semi-structured interviews. Insights and rich, in-depth narratives that illuminate the subtleties and contextual elements influencing the efficiency of microfinance organizations are what qualitative data collecting attempts to capture. In the same context, to conduct the quantitative portion of the study, a representative sample of both microfinance clients and non-clients in the Okaikoi North Municipality were given structured questionnaires. Demographic data, financial habits, access to credit and savings, and opinions regarding the role of microfinance in reducing poverty were gathered through questionnaires. Quantitative data gathering enables a systematic, quantitative study of statistical relationships, patterns, and trends. A thorough and complex knowledge of the function of microfinance institutions in the reduction of poverty was made possible by the merging of qualitative and quantitative data collection methodologies. To triangulate and complement one another, the results from the two methodologies have been combined throughout the data analysis phase, providing an in-depth study. 3.4 POPULATION, SAMPLE AND TECHNIQUE The study population consists of individuals, households, and small and medium-scale businesses in the Okaikoi North Municipality. It includes both microfinance clients and nonclients who have engaged with microfinance institutions for financial services and poverty alleviation purposes. 37 The population are made-up of a wide variety of individuals who have engaged with microfinance organizations, allowing for a thorough investigation of the effect of microfinance on reducing poverty in various population segments. Clients of microfinance who have used products like loans, savings, and insurance make up the research population; this information is important for understanding how microfinance contributes to the reduction of poverty. For comparative study, non-clients who have not dealt with microfinance institutions are also included to evaluate the effect of such services on reducing poverty in comparison to individuals who do not have access to them. Examining how microfinance organizations might foster entrepreneurship and advance economic development involves small and medium-sized businesses. To guarantee that various groups within the population are-well-represented, a stratified sampling method was used. In order to capture the diversity and variances among the population, classes are established depending on factors like income level, occupation, and education. According to Jiang et al. (2013) found that, “population stratification can have a significant influence on studies of rare variants especially when the sample size is large and the population is severely stratified.” The sample size is decided via proportionate Yamane Sample calculation: A statistical technique widely used to determine the sample size determination for a research study. Taro Yamane (1967), a Japanese statistician, developed this sampling technique. In correspondence to this study, the sample size in consideration is 202 respondents, with a confidence level of 95%, a margin of error of 0.05, and appropriately 5%. 3.5 DATA COLLECTION INSTRUMENT This study gathered data were from both primary and secondary sources. Structured interviews and questionnaires were utilized to collect primary data from the chosen participants. The interviews and questionnaires gather data on the participants' socioeconomic status, interaction 38 with microfinance organizations, and opinions about the influence on eradicating poverty. The secondary data from current literature, studies, and pertinent papers about Microfinance and Poverty Alleviation. 3.6 METHOD OF DATA ANALYSIS/STATISTICAL PROCEDURES The collected quantitative data was analyzed using statistical software, such as SPSS (Statistical Package for the Social Sciences). Descriptive statistics, such as frequencies, percentages, and means, summarize the data. Inferential statistics, such as correlation analysis and regression analysis, are employed to establish relationships between tests and hypotheses. While the qualitative data is analyzed thematically. The interview transcripts and open-ended responses from questionnaires were carefully reviewed, and categorized into themes and subthemes. These themes were used to provide a comprehensive understanding of the experiences and perspectives of the study population. However, employing a mixed-method research design and conducting a case study in the Okaikoi North Municipality, this study aims to provide a unique perspective on the role of microfinance institutions in poverty alleviation. The research combines quantitative analysis to establish relationships and patterns, and qualitative analysis to capture the nuances and narratives of the study population. 39 CHAPTER FOUR DATA ANALYSIS AND FINDINGS 4.0 INTRODUCTION In this chapter, the data collected from participants in the Okaikoi North Municipality is analyze to examine the impact of Microfinance Institutions (MFIs) on poverty alleviation. Various demographic characteristics and patterns of microfinance usage among the participants are identified. The analysis outlines the independent and dependent variables that contributed to understanding the role of MFIs in poverty alleviation in the Okaikoi North Municipality. 4.1 DEMOGRAPHIC CHARACTERISTICS OF PARTICIPANTS Table 4.1 Socio - Demographic Characteristics of Respondents VARIABLES CATEGORIES FREQUENCY PERCENTAGES Gender Male 114 56.4% Female 88 43.6% 39 120 59.4% 50 34 16.8% 60 27 13.4% 60+ 21 10.4% Basic 11 5.4% High school 28 13.9% Tertiary 114 56.4% Others 49 24.3% Age Level of Education 40 VARIABLES CATEGORIES FREQUENCY PERCENTAGES Marital Status Single 115 54.5% Married 45 25.7% Divorced 12 5.9% Widowed 30 13.9% Civil servants 49 22.3% Self employed 48 21.8% Labors 31 13.9% Others 74 42.1% 0-5 100 53.5% 6-10 38 17.3% 11-15 29 13.4% 15+ 35 15.8% Job Specification Work Experience Source: Field Survey, 2023 The data reveals that 56.4% of the participants were male while, 43.6% were female meaning males are the majority. The participants' ages are distributed as follows: 18-39 (59.4%), 40-50 (16.8%), 51-60 (13.4%), and 60 years or older (10.4%). From the data collected, majority of the respondents were youthful, between the ages of 18 and 39. The participants exhibit varying levels of education with 56.4% having tertiary education and 24.3% falling into the "Others" category (vocational schools). The lowest percentage is 5.4%, which is basic education. The majority of participants are single (54.5%), while 25.7% are married. However, those who were divorced and widowed happened to be 5.9% and 13.9% respectively. 41 Job specifications are diverse, with civil servants (22.3%) and self-employed individuals (21.8%) Labors and others that is 13.9% and 42.1% respectively, showing that the majority fall under unknown job specification. The participants' work experience spans from 0-5 years (53.5%) to 15+ years (15.8%). Respondents having 0-5 years of experience formed the highest category (with the percentage of 53.5), while the lowest percentage of 13.4 emanated from those having working experience of 11-15 years. 4.2 INCOME PER MONTH Table 4.2: Income Distribution VARIABLES CATEGORIES FREQUENCY PERCENTAGES Income 0-499 70 34.6% 500-999 34 16.8% - 48 23.8% 2000+ 50 24.8% As seen in Table 4.2, the income distribution of participants ranges from 0-499 cedis per month (34.6%) to 2000+ Cedis per month 24.78%). 500-999 and- had 16.8% and 23.8% respectively in terms of income. This shows that majority of the population earns less than 500 cedis a month which make living in Okaikoi a struggle. 42 4.3 MICROFINANCE USAGE AND PERCEPTION TABLE 4.3 MICROFINANCE USAGE AND PERCEPTION VARIABLES CATEGORIES FREQUENCY PERCENTAGES Savings with MFI’S Yes 44 22.3% No 158 77.7% Savings 85 42.1% Loans 67 33.2% Funds Transfer 25 12.4% Micro Insurance 25 12.4% Yes 150 74.3% No 52 25.7% Yes 141 69.6% No 61 30.4% Yes 163 80.7% No 39 19.3% Yes 150 74.3% No 52 25.7% Service from MFI’s Loan Application Ease of Loan Acquisition Concerns About Interest Rates Loan Repayment Difficulty 43 Majority of the respondents (77.7%) have savings with microfinance institutions, while 22.3% do not. This suggests that a significant portion of the surveyed population may be utilizing MFIs for savings. The most utilized service is savings (42.1%), followed by loans (33.2%). Funds transfer and micro insurance are less-common services. This information provides insights into the preferences or needs of the surveyed population regarding MFI services. A significant majority of the respondents (74.3%) have applied for loans, indicating a high demand for financial assistance through loans among the surveyed population. A substantial portion of the respondents (69.6%) find the acquisition of loans easy. This suggests that, for a significant majority, the process of obtaining a loan from MFIs are perceived as accessible. The majority of the respondents (80.7%) express concerns about interest rates. This indicates that interest rates are a significant consideration for individuals dealing with MFIs and may impacts their financial decisions. A notable percentage (74.3%) of the respondents faces difficulties in repaying loans. This information suggests that there may be challenges in the repayment process, and understanding these challenges could be crucial for improving the loan repayment experience. 44 Table 4.4 IMPACT OF MICROFINANCE ON POVERTY ALLEVIATION VARIABLES CATEGORIES FREQUENCY PERCENTAGES Improved Standard of Strongly agree 87 43.1% Agree 51 25.2% Neutral 38 18.8% Disagree 14 7.0% Strongly disagree 12 5.9% Strongly agree 76 37.6% Agree 51 25.2% Neutral 50 24.8% Disagree 14 6.9% Strongly disagree 11 5.4% Strongly agree 76 37.6% Agree 45 22.3% Neutral 45 22.3% Disagree 21 10.4% Strongly disagree 15 7.4% Living Increased Job Opportunities Improved Income 45 The majority of respondents strongly agree or agree (68.3%) that microfinance has contributed to an improved standard of living, while a smaller percentage expressed neutrality and disagreement. A significant portion of respondents (62.8%) believed that, microfinance has led to increased job opportunities. However, there is a notable percentage expressing either neutrality, disagreement, or strong disagreement. Similar to job opportunities, a substantial percentage (59.9%) strongly agree or agree that microfinance has contributed to improved income. However, there is also a noteworthy percentage expressing either neutrality, disagreement, or strong disagreement. The majority of respondents seem to perceive that microfinance has positively impacts their standard of living and income. While a significant portion believes in increased job opportunities, there is a notable segment expressing uncertainty or disagreement. The percentages expressing neutrality or disagreement suggest some variability in perceptions among respondents. 4.4.0 IMPACT OF MICROFINANCE ON ECONOMIC DEVELOPMENT This aspect offers statistical analysis on the impact of microfinance on economic development in the Okaikoi North Municipality, as well as its on small and medium-sized firms (SMEs). The model uses inflation and investment as the control variables of the study. The findings rely on secondary data from government papers, economic indicators, articles, and other relevant materials obtained from Bank of Ghana’s website from 2012 to- MODEL SPECIFICATION To establish the relationship between dependent and independent variables, a multiple regression models are used. The authors employed SPSS to execute the data estimation and equations for the study. The Spearman correlation matrix serves as a statistical method of 46 analysis utilized to estimate the relationship between one or more independent variables and a dependent variable. This method determines the linkage by illustrating how changes in one variable affect the others. The difference between the observed and predicted variables configured in a Straight line. The general model is formulated as follows: 𝐺𝐷𝑃 = 𝐹(𝑇𝑋, 𝑃𝑋, 𝐼𝑁𝐹, 𝐼𝑁𝑉) ………………………………………………………. (1) Specific model 𝐺𝐷𝑃𝑡 = 𝛽° + 𝛽1𝑇𝑋𝑡 + 𝛽2𝑃𝑋𝑡 + 𝛽3𝐼𝑁𝐹𝑡 + 𝛽4𝐼𝑁𝑉𝑡 + 𝜀𝑡 ……………………………………. (2) In the model, 𝐺𝐷𝑃𝑡 represents Gross Domestic Product at time t, which is an indicator of economic development. 𝛽° is a constant, while 𝛽1, 𝛽2, 𝛽3, and 𝛽4 are coefficients that need to be determined. 𝑇𝑋𝑡 represents taxation at time t, 𝑃𝑋𝑡 represents the profitability of small and medium enterprises at time t, 𝐼𝑁𝐹𝑡 represents the inflation rate at time t, 𝐼𝑁𝑉𝑡 represents the investment in the economy at time t, and 𝜀𝑡 represents the error term at time t. 47 Table 4.4 Summary of Variables TYPE OF NAME OF VARIABLE VARIABLE Dependent Gross Variable Domestic SYMBOL DESCRIPTION EXPECTED SIGN GDP Measure of the total value of goods and services produced within a country Product within a year. Taxation TX + gathers revenue Independent Variables Ways by which the government Profitability PX The measure of how much + profit a firm generates from its operations and activities. Inflation Control INF Gradual increase in the general - price levels of goods and Rate services within an economy Variables over time Investment INV Using money or resources to purchase assets with + the expectation of generating future income, appreciation, or other benefits. 48 4.4.2 DESCRIPTIVE STATISTICS Table 4.5 Summary of Statistics STATISTICS GDP TX PX INF INV Mean .632 .438 .542 .621 .527 Standard Deviation .117 .231 .220 .128 .162 Variance .0138 .0534 .048 .016 .026 Skewness .299 .0567 -.542 -.126 -.572 Kurtosis 2.339 2.287 2.457 3.667 3.661 Minimum .421 .051 .115 .120 .115 Maximum .960 .960 .965 .960 .954 Median .648 .452 .564 .625 .546 The table above provides summary descriptive statistics for the five variables under the observation. Economic development (GDP) has an average value of 0.632 across the observation with variability of data points of 0.117 and variance of 0.138 showing how much the data values vary from the mean. It has a positive skewness greater than 0 indicating longer tails at right side at 0.299 with 2.339 tailed kurtosis and, minimum and maximum values of 0.421 and 0.960, respectively. It also has a median of 0.648 in the observed dataset. Taxation (TX) is one of the independent variables with an average of 0.438, dispersion of 0.231 data points, 0.053 variations of data from mean, positive skewness value of 0.056, kurtosis of 49 2.287, with minimum of 0.051 and maximum of 0.960 and a middle value of 0.452 in the data set. The average value of PX is 0.542, indicating the average profitability of SMEs. The variability in data points is 0.220, which suggests the spread of small and medium enterprises from the mean. The variance is 0.480, indicating the dispersion of the data. The negative skewness of 0.542 suggests that the data has longer tails on the left side, indicating a distribution that is skewed to the left. The kurtosis is 2.456, which measures the degree of peakedness or flatness of the distribution. The dataset produces the lowest value of 0.115 and the highest value of 0.965. The median value is 0.564. Inflation (INF) serves as a control variable, indicating that it is one of the variables held constant in the study context. It has a mean of 0.621 across the observation with standard deviation of 0.128 showing less spread-out values from mean and variance of 0.016. It exhibits a negative skewness of -0.126, indicating longer tails on the left, and a kurtosis of 3.667, indicating more extreme values of inflation that rise significantly after COVID. It has a minimum value of 0.120 and a maximum value of 0.960 showing the lowest and highest values of inflation within the study period with a middle value of 0.625 in the dataset. Investment (INV) is another control variable in the observation with average of 0.527, standard deviation of 0.162 indicating the variability of investment in the data points with variance of 0.026 showing how the data values vary from the mean. It has a negative skewness of -0.572 indicating longer tails on the left side and a kurtosis of 3.661 indicating more extreme values in the tails considering the tailed distribution. It has a minimum value of 0.115 and a maximum of 0.954 showing the lowest and highest values observed in the dataset. It also has a middle value of 0.546. 50 Additionally, the higher kurtosis values for Inflation (INF) and Investment (INV) suggest that their distributions might have more extreme values in the tails compared to a normal distribution. The minimum and maximum values give you an idea of the range within which the variables operate. 4.4.3 CORRELATION MATRIX Table 4.6 Spearman Correlation Matrix Variable GDP TX PX INF GDP 1.0000 TX 0.1189 1.0000 PX 0.3867 -0.0933 1.0000 INF -0.8294 -0.0521 -0.3223 1.0000 INV 0.0940 0.0836 0.0209 0.0234 INV 1.0000 The values in the matrix show the Spearman correlation coefficients between pairs of variables. The Spearman correlation assesses the strength and direction of monotonic relationships between variables, which means its captures non-linear associations as well. The correlation coefficient of 1.0000 between GDP and itself is always 1 as a variable is perfectly correlated with itself. The coefficient between GDP and TX is 0.1189, indicating a weak positive monotonic relationship that exists between tax and GDP. The positive shows that they move in the same direction and an increase in tax by 1% will lead to a rise in GDP by 0.1189%. The coefficient between GDP and PX is 0.3867, suggesting a moderate positive monotonic relationship between economic development in GDP and small and medium enterprises 51 profitability margin. Indicating that 1% increase in SMEs profitability will lead to 0.3867% increase in GDP growth. The coefficient between GDP and INF is -0.8294, indicating a strong negative monotonic relationship. This indicates that inflation and GDP growth are inversely related, meaning that increases in inflation leads to a proportionate decrease in economic development, and it is supported by various studies and economic theories. Azam (2022) which revealed that many erstwhile studies provide evidence of negative effect of inflation rate on growth. The coefficient between GDP and INV is 0.0940, suggesting a very weak positive monotonic relationship. This shows that an increase in investment will narrowly lead to increase in economic development. This correlation coefficients help understand how changes in the independent and control variables are associated with changes in the dependent variable (GDP). For example, a strong negative correlation between GDP and INF suggests that higher inflation is associated with lower GDP. In the context of taxation and small and medium enterprises (SMEs) relationship in the diagram is -0.0933 indicating a weak negative monotonic relationship between them. This implies that an increase in taxation lead to a narrowly decrease in firm profitability. Looking at SMEs and inflation, it is -0.3223 indicating weak negative relationship between firm profitability and inflation in the short run. When there is inflation increase, at the beginning firms cannot adjust prices which leads to a reduce profits. Concisely, considering SMEs and investment is 0.0209 indicating very weak positive relation between them. Hence, an increase in investment by SMEs leads to a low increase in profitability. Popa (2014) identified the financial factors that impact on the functionally and profitability of SMEs 4.4.4 CROSS-SECTIONAL DEPENDENCY TEST A cross-sectional dependency (CD) impact on an estimate depends on many factors, including the magnitude and kind of cross-sectional correlations. Ignoring cross-sectional dependence 26 52 may result in a substantial loss in estimation efficiency (Bi et al., 2020a). The findings of Friedman's cross-sectional dependence test are showed in the table below. Table 4.7: Friedman Test of Cross-Sectional Independence TEST STATISTICS PROBABILITY Using the Fixed Effects (FE) 17.479 0.9385 Using the Random Effects (RE) 17.313 0.9421 For the fixed effect (FE) and random effect (RE) models, the table above showed probability values of 0.9385 and 0.9421, respectively. This suggests that the test results for the FE and RE models are insignificant for both levels. The Researchers rejected the alternative hypothesis of CD and accepted the null hypothesis of no CD because both the FE and RE showed statistically insignificant probability values. This suggests that if one SME experiences a shockwave, it is likely that the other SMEs will not be affected. It is in line with Crnogaj (2022), who stated that Covid-19 which was a shockwave, did not affect every SME. 4.4.5 REGRESSION MODEL To examine the association between economic development, taxation, and the growth of SMEs in the Okaikoi North Municipality, the authors conducted multiple linear regression to determine how the variables (economic development, taxation of SMEs, inflation, and investment) significantly predict economic growth. The FMOLS is the composition estimates in R1 and AMG as the robustness test in R2. The study combines all the independent variables in a single regression. Presentation of results of the multiple regressions is displayed in the table below. 53 Table 4.8 Multivariate regression analysis MODEL A VARIABLES MODEL B FMOLS AMG FMOLS AMG R1 R2 R1 R2 TX .0687*** .0747** .3338*** .3010*** PX .0705*** .0358 -.0293 -.0319 INF .6597*** .7933*** .0277 .0403** INV .0427 .0361 .5344*** .6146*** R-SQUARED .6069 .7375 NB: ***, **, * signifies 1%, 5% and 10% respectively. The tax revenue (TX) recorded positive values such as .0687, .0747, .3338 and .3010 at 1% and 5% respectively. This implies that, taxation has a positive impact on economic development. It helps increase economic development in terms of revenue for the government expenditure on infrastructure and other projects. In real fact, the government tax agencies should work hard on tax revenue and avoiding tax evasion to increase the tax net. This study confirms an investigation of Chinedu & Ochuko (2018) which stated tax revenue is frequently considered as a form of sustainable financing with stable and predictable fiscal environment to promote growth and enable governments to finance their social and infrastructural needs. 54 Moreover, SMEs profitability (PX) recorded both positive and negative values as .0705, .0358, -.0293 and -.0319 which are significant at 1% and insignificant at certain circumstances. The figures show that SMEs profitability have both positive and negative relationship to economic development in the two models. As taxes are been taking from firms’ profits and currently in Ghana electronic transactions help gather revenue for government expenditure. However, the imposition of taxes on SMEs reduces their disposable income and production capabilities. This implies that the government and its agencies should exercise caution when seeking to generate revenue from enterprises in the economy through taxes such as gains tax and transaction taxes like the E-levy. While these taxes may increase government revenue, they can also have a negative impact on the net production of enterprises and contribute to increased poverty levels. For Model A (FMOLS), the R-squared value of 0.6069 means that approximately 60.69% of the variance in the dependent variable (presumably the variable being predicted in the regression), is explained by the independent variables included in Model A. For Model B (AMG), the R-squared value of 0.7375 means that approximately 73.75% of the variance in the dependent variable is explained by the independent variables included in Model B. A higher R-squared value generally indicates a better fit of the model to the data, because a larger proportion of the variability in the dependent variable is accounted for by the independent variables. However, it is essential to consider other factors and not rely solely on R-squared to evaluate the model's goodness of fit. For example, the significance of individual coefficients, the model assumptions, and other diagnostics should also be considered. In brief, the study reveals that Microfinance Institutions play a significant role in the lives of populace, providing savings and loan services. However, concerns about high-interest rates and loan repayment difficulties are apparent challenges facing the customers. 55 Microfinance has a positive impact on poverty alleviation, with many participants reporting improved living standards and increased income. Taxation positively influences economic development, emphasizing the importance of effective tax revenue collection for government infrastructure projects. The relationship between SMEs profitability and economic development is complex and varies. Policymakers should carefully consider the impact of taxation on businesses and its potential consequences on economic growth. High inflation negatively affects economic development, highlighting the need for inflation control measures. Investment positively correlates with economic development, indicating that encouraging investment can contribute to economic growth. Benhabib (2020) decomposes the well-documented relationship between financial development and growth. It examines whether financial development affects growth solely through its contribution to growth in ``primitives’’ or factor accumulation rates or whether it also has a positive impact on total factor productivity growth. The results suggested that indicators of financial development are correlated with both total factor productivity growth and investment 56 CHAPTER FIVE SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 5.1 INTRODUCTION In the quest for poverty alleviation and economic development, the role of microfinance institutions has gained increasing recognition and importance on both the national and international stages. This chapter delves into the findings and discussions stemming from a comprehensive study conducted in the Okaikoi North Municipality. The preceding chapters have laid the groundwork by discussing the theoretical underpinnings, research methodology, and a detailed review of the literature relevant to the subject matter. This chapter embarks on a journey to shed light on the extent to which microfinance institutions have been able to fulfil their noble mission within the specific context of the Okaikoi North Municipality. It explores the impact of microfinance programs on income generation, employment, and socio-economic development. Furthermore, it delves into the challenges and opportunities that the microfinance sector faces in its pursuit of poverty alleviation in this region. 5.2 SUMMARY The study's key findings shed light on the multifaceted dynamics of microfinance institutions and their impact on poverty alleviation in the Okaikoi North Municipality. The analysis revealed crucial insights into the multifaceted role of microfinance institutions (MFIs) in poverty alleviation within the Okaikoi North Municipality. Findings suggest that while MFIs significantly contribute to enhancing the standard of living and income levels for participants, challenges such as high-interest rates and complex-loan-repayment procedures persist. 57 Moreover, the preference for other financial institutions over MFIs emphasizes the need for addressing customer concerns and improving service efficiency. The correlation analysis demonstrated a notable positive relationship between taxation and economic development, underscoring the significance of effective tax policies for sustainable infrastructural growth. Furthermore, the complex interplay between MFIs, small and mediumsized enterprises (SMEs) profitability, and economic development highlighted the delicate balance between taxation and business productivity. The negative impact of inflation on economic development underscored the necessity for inflation control measures to maintain a stable economic environment. Encouragingly, the positive correlation between investment and economic development emphasized the importance of fostering an environment conducive to investment and business growth. These findings underscore the importance of strategic policy considerations in the realms of taxation, inflation control, and investment facilitation to foster sustainable economic development and poverty reduction in the Okaikoi North Municipality. 5.3 CONCLUSIONS In conclusion, this study sought to conduct a broad examination of the role of microfinance institutions in poverty alleviation within the Okaikoi North Municipality. Through a comprehensive analysis of various demographic characteristics, microfinance usage patterns, and the impact of MFIs on economic development. Firstly, the study meticulously examined the demographic characteristics of participants, revealing crucial insights into the diverse population segments engaging with microfinance institutions. The analysis highlighted the significance of gender, age, education, and other demographic factors in understanding the nuanced impact of MFIs on poverty alleviation. These findings underscore the importance of tailored financial services to meet the diverse needs of various demographic groups within the 58 Okaikoi North Municipality. Moreover, the research delved into the intricacies of microfinance usage and perceptions, uncovering both the positive contributions and challenges faced by participants. The study's in-depth analysis of savings, loan applications, and the ease of loan acquisition provided a comprehensive understanding of the crucial role of MFIs in providing financial access to underserved communities. Simultaneously, the concerns about interest rates and loan repayment difficulties highlighted the need for policy interventions to ensure sustainable and equitable financial access for all participants. Additionally, the impact of microfinance on poverty alleviation was a central focus of this study. By assessing the participants' perspectives on improved living standards, job opportunities, and income growth, the research provided valuable insights into the transformative role of MFIs in fostering economic development and enhancing the well-being of the local community. The findings emphasized the positive effects of microfinance in empowering individuals and businesses, contributing to overall socio-economic development within the Okaikoi North Municipality. Furthermore, the study carefully examined the implications of taxation on economic development, revealing the complex interplay between tax policies, business profitability, and government revenue generation. The analysis underscored the need for a balanced approach to taxation, ensuring sufficient revenue collection while fostering an enabling environment for business growth and sustainable economic development. The findings presented here are not just crucial for the local residents and policymakers of the Okaikoi North Municipality but also have broader implications for microfinance practitioners, scholars, and development experts who seek to better understand the role of microfinance institutions in the global fight against poverty. 59 In respect to the first study Hypothesis, H1, the exploration revealed that microfinance institutions have a positive impact on poverty reduction in the Okaikoi North Municipality. Participants involved with microfinance programs experienced tangible improvements in their economic well-being, indicating a positive correlation between microfinance initiatives and poverty alleviation in the region. Concerning H2, the implementation of microfinance programs in the Okaikoi North Municipality has led to noticeable improvements in the socioeconomic conditions of the beneficiaries. The study's findings reveal that participants engaging with microfinance initiatives enhanced living standards, increased job opportunities, and overall economic empowerment, highlighting the positive influence of microfinance on the beneficiaries' socioeconomic well-being. 5.4 RECOMMENDATIONS Based on the comprehensive analysis and findings of this study, several key recommendations are proposed in order to enhance the impact of microfinance institutions (MFIs) and promote sustainable economic development in the Okaikoi North Municipality. Firstly, it is imperative that policymakers and regulatory authorities work closely with MFIs to develop and implement policies that ensure fair and transparent interest rates. Effort should be directed towards creating an enabling environment that promotes financial inclusion and safeguards the interests of borrowers, especially those from marginalized communities. Moreover, there is a critical need for MFIs to prioritize financial literacy programs aimed at empowering clients with the necessary knowledge and skills to manage their finances effectively. By providing tailored training and workshops on financial planning, budgeting, and investment strategies, MFIs can equip their clients with the tools needed to make informed financial decisions and improve their overall financial well-being. 60 Furthermore, it is recommended that stakeholders collaborate to streamline and expedite the loan application and approval processes within MFIs. Reducing bureaucratic hurdles and implementing efficient digital platforms can significantly enhance the accessibility and efficiency of financial services for clients. This streamlining process should also include the introduction of flexible and affordable repayment options to ease the burden on borrowers and promote timely repayment. 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Age and ageing. https://doi.org/10.1093/ageing/afw002. 67 APPENDIX Acronym Proper Name MFIs Microfinance Institutions MFB Microfinance Bank ONMG Okaikoi North Municipality of Ghana TAM Technology Acceptance Model TIB Theory of Interpersonal Behavior SABBS Savings and Basic Banking Services M-Banking Apps Mobile Banking Applications SPSS Statistical Package for the Social Sciences SROI Social Return on Investment RCTs Randomized Controlled Trials 68