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Role of microfinance saving in Cameroon: a neo‐structuralist analysis

Jacob Tche (Faculty of Economics and Management, University of Yaoundé II, Yaoundé, Cameroon)

International Journal of Development Issues

ISSN: 1446-8956

Article publication date: 26 June 2009

684

Abstract

Purpose

The aim of this paper is to establish an original database from fieldwork on microfinance institutions in Cameroon.

Design/methodology/approach

The main method used for the research involved statistical analysis of an original survey data. The latter fieldwork analysis has enabled us to test the hypothesis of neoclassical and neo‐structuralist economists advocating a significant relationship between microfinance savings and liberalised real bank deposit interest rates.

Findings

The statistical analysis carried out indicated that microfinance savings are associated to variables other than the rate of interest. The failure of a liberalised interest rate policy to cause a significant portfolio shift from microfinance into the banking system does not support the interest responsiveness of savings as advocated by the McKinnon‐Shaw school. This paper supports, therefore, the neo‐structuralist analysis of financial development where microfinance institutions are an important structural feature of financial systems in many developing countries.

Research limitations/implications

It would be interesting to extend statistical analysis undertaken in this paper to other African countries.

Practical implications

The main policy issue affecting microfinance from the empirical analysis is the need to mitigate the extremely high interest rates utilised by microfinance. Banks may be encouraged to undertake a series of measures such as guaranteeing of future loans to their customer by linking savings and loans to attract microfinance members.

Originality/value

The contribution of this paper, therefore, is to provide a unique opportunity to investigate the association between microfinance institution assets and real interest rates in an African country.

Keywords

Citation

Tche, J. (2009), "Role of microfinance saving in Cameroon: a neo‐structuralist analysis", International Journal of Development Issues, Vol. 8 No. 1, pp. 48-60. https://doi.org/10.1108/14468950910967065

Publisher

:

Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited

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