Does microfinance cause banking sector development and economic growth? An application to Mongolia

Batkhuyag Myagmar*, Robert Lensink, Wim Heijman

*Bijbehorende auteur voor dit werk

OnderzoeksoutputAcademicpeer review


This study analyzes the long- and short-run relationships between microfinance sector development, bank-based financial sector development, and economic well-being in Mongolia using a secondary dataset covering 40 quarters between 2006q4 and 2016q3. We construct a separate index for banking sector development and for microfinance sector development, and use the growth rate of quarterly GDP per capita as a proxy for economic well-being. A cointegration analysis, based on the autoregressive distributed lag (ARDL) bounds testing approach, indicates that there is at least one cointegrating relation among microfinance development, banking sector development, and economic growth in Mongolia. The study also suggests that there is a bidirectional relationship between the microfinance and banking sectors in the short run. However, in the long run there is an unidirectional positive causal relationship from microfinance to the banking sector. The microfinance sector thus has become an integral part of the bank-based financial sector of Mongolia. However, neither microfinance development, nor banking sector development, appear to contribute to economic growth in Mongolia.
Originele taal-2English
TitelHandbook of Microfinance, Financial Inclusion and Development
RedacteurenValentina Hartarska, Robert Cull
UitgeverijEdward Elgar Publishing
Aantal pagina's24
ISBN van elektronische versie9781789903874
ISBN van geprinte versie9781789903867
StatusPublished - 10-feb.-2023

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