Microfinance, the Role and Impact on Macroeconomic Indicators of the Country. Case study: Albania

Abstract

Microcredit or microfinance are one of the most important novelties on development policy in the last 25 years. Most of the recent studies are based on the impact that microfinance has on poverty reduction or on the income on macroeconomic level. Due to lack of data on microfinance on a macro level, studies of their impact on poverty are limited. However, they have recently analysed the link between microeconomics and microfinance activity, which has shown significant connectivity between the operations of Micro Financial Institutions and Macroeconomic indicators.Microfinance in Albania has developed and this is demonstrated by the presence of Micro Financial Institutions which have contributed to poverty reduction and to economic development in general, and to agricultural development in particular. The purpose of the study is to analyse the importance and the relationship between microfinance and macroeconomic indicators, the impact that microfinance has on macroeconomic indicators. Based on previous literature researchers and empirical studies, this study aims to analyse empirically the relationship between the gross portofolio of MFIs and macroeconomic factors. Specifically, to analyse whether a country with high level of credit portfolio provided by Micro Financial Institutions has low poverty and macroeconomic factors taken into analysis, considering the endogeneity of the gross portfolio of Micro Fianancial Institutions. The empirical evaluation and analysis is carried out through econometric evaluation using the EViews program.