Micro-financing in the era of good governance: economic benefits. An empirical study

Abstract

In an era of good governance, micro-financing can benefit from rules of the game enabling individuals in developing economies to borrow funds while ensuring the institutions lending such funds will be repaid. This study looked at the types of mechanisms making this possible. Even at this exploratory stage, the current study showed the benefit of good governance for both lenders and borrowers. African people, the primary focus of this study, were encouraged to help themselves out of poverty by putting in place well governed institutions, in order to attract desperately needed funding. Data from a micro-segment of African natives found individuals’ familiarity with Non-Bank Financing Institutions (NBFIs), and individuals’ acceptance of good governance directly impacted their likelihood to patronise these NBFIs. This study’s contribution is to suggest Micro-financing, implemented the right way, that is, guided by good governance, could be one way to help minority populations get out of poverty.