Does Microcredit Increase Household Wellbeing? Empirical Evidence from Ghana: A Panel Study.




Journal Title

Journal ISSN



Volume Title


Institute of Small Business and Entrepreneurship



Peer reviewed



Aim of the Study The wellbeing of a microfinance borrower’s household is one of the topical issues being highlighted as a result of the current commercialization of the microfinance sector Drawing on the institutional theory, the study examines the impact of microcredit on borrowers’ household wellbeing in Ghana. This study aims at investigating the impact of five key major microcredit variables namely; loan amount, loan cost, loan repayment flexibility, loan accessibility as well as loan usage on borrowers' household wellbeing in Ghana. Methodology This study adopted the Smart Partial Least Square Structural Equation Modelling tool (PLS-SEM) in measuring the impact of microcredit on SME borrowers’ household wellbeing. Deploying the stratified random technique, 455 SMEs in Ghana constituted the study’s primary data source. Microcredit (MC) and SME borrowers’ household wellbeing (BHW) were both measured on the five-point Linkert scale ranging from strongly disagree (1) to strongly agree (5) while Contribution 2 The study established the critical role of microcredit factors such as loan repayment flexibility, flexibility in loan access, and loan usage in the promotion of the wellbeing of SME borrowers’ households (Omondi & Jagongo, 2018). These factors are statistically significant in explaining the SME borrowers’ household well-being. Nonetheless, the adequacy of the loan amount and loan cost is statistically insignificant. Further, the indirect effect of gender as a moderator between loan accessibility and SME borrowers’ households is insignificant. Implications for Policy Sustained deployment of microcredit to SMEs instigates their survivability and productivity levels which triggers improvements in the wellbeing of their household. Therefore, institutions such as the Central Bank of Ghana should regulate the microfinance sector to promote the wellbeing of clients in their attempt to access microcredit from MFIS. This will reduce the numerous voids to promote a seamless deployment of microcredit to the SME sector (North, 1990). Implications for Practice Sustained microcredit investments in the SME sector portend huge positive outcomes including tremendous improvement in the wellbeing of the SME borrower's household and the entire economies in developing countries (Toindepi, 2016). Consequently, increased deployment of microcredit to SMEs to instigate their survivability and eventually improve their productivity levels and the wellbeing of their household is imperative (Roy & Mohanty, 2020). It must be emphasised as well the invaluable roles of state institutions in promoting the required conducive environments for the sustenance of the SME sector as regards the institutional structures to reduce the numerous voids and facilitate a seamless deployment of microcredit to the SME sector (North, 1990).



Borrower’s household wellbeing, MCIs, microcredit, Ghana, Small and medium enterprises


Ameh, J.K., Atiase V.Y, Dzansi, D.Y. (2022) Does Microcredit Increase Household Wellbeing? Empirical Evidence from Ghana: A Panel Study. Presented at the 43rd Annual Conference for the Institute of Small Business and Entrepreneurship, York. October 27–28, 2022


Research Institute

Finance and Banking Research Group (FiBRe)