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The impact of microfinance institutions in local financial markets: a case study from Kenya
Author(s) -
Johnson Susan
Publication year - 2004
Publication title -
journal of international development
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.533
H-Index - 66
eISSN - 1099-1328
pISSN - 0954-1748
DOI - 10.1002/jid.1088
Subject(s) - microfinance , competition (biology) , context (archaeology) , business , financial market , financial system , economics , finance , economic growth , ecology , paleontology , biology
This paper looks beyond the direct impact of microcredit provision on users to examine whether microfinance institutions (MFIs) have had wider impacts within the local financial markets in which they are operating. It considers the potential for both competition and demonstration effects on other financial providers. In the context of local financial markets in and around the small town of Karatina in Central Kenya, supply side information is used to investigate the key changes in provision between 1999 and 2003. The paper concludes that changing macroeconomic conditions have been the main driver increasing competition for middle and lower income clients and that few competition or demonstration effects resulting from the MFIs are in evidence. Copyright © 2004 John Wiley & Sons, Ltd.