Analysis of the Effect of Microfinance Institutions on Poverty Reduction in Nigeria
Analysis of the Effect of Microfinance Institutions on Poverty Reduction in Nigeria

Summary/Abstract: Credit inaccessibility constitutes a major hindrance to business growth in Nigeria, where a large majority of micro and small business owners do not have adequate collateral to secure a loan. This study examined the effect of microfinance institutions on reduction of poverty as well as entrepreneurial activities in Nigeria. The study employed a survey research instrument through the administration of questionnaires to two hundred (200) micro and small-scale business enterprises in Ikpoba Okha Local Government Area of Edo State, Nigeria. The study adopted Pearson correlation, multivariate regression techniques, Heteroskedasticity diagnostic test and Ramsey RESET test for data analyses. The results showed that microfinance institution and poverty alleviation were positively and significantly related while entrepreneurial activity and poverty reduction were positively and insignificantly related. The study recommended that microfinance institutions should be given a conductive environment to operate in order to assist in developing micro and small business enterprises, thereby help mitigate the effect of poverty ravaging the Nigerian society.

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