THE IMPACT OF MICROFINANCE ON FINANCIAL INCLUSION IN THE WAEMU’S COUNTRIES AND ITS IMPLICATIONS

Abstract

This study aims to evaluate the impact of microfinance institutions on financial inclusion in developing countries, especially in Sub-Saharan Africa in the West African Economic Monetary Union. The objective is attained through time-fixed effects, clustered by countries. The estimation results revealed that microfinances have a positive impact on financial inclusion, which is statistically significant when using fixed-effects modelling with clustering by countries. When adding more controls, the interest rate is a determinant of inclusion but has a negative effect on it. The gross domestic product growth rate per year and the proportion of individuals living in rural areas also play a role. Investment in the development of microfinance is necessary to achieve inclusion. However, other driving forces should be used as well such as urbanisation, economic growth, to ensure everyone is included and benefit from it.