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Journal cover: International Journal of Development Issues

International Journal of Development Issues

ISSN: 1446-8956

Online from: 2003

Subject Area: Economics

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

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Title:Role of microfinance saving in Cameroon: a neo-structuralist analysis
Author(s):Jacob Tche, (Faculty of Economics and Management, University of Yaoundé II, Yaoundé, Cameroon)
Citation:Jacob Tche, (2009) "Role of microfinance saving in Cameroon: a neo-structuralist analysis", International Journal of Development Issues, Vol. 8 Iss: 1, pp.48 - 60
Keywords:Cameroon, Credit institutions, Interest rates, Personal finance, Savings
Article type:Research paper
DOI:10.1108/14468950910967065 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Acknowledgements:The author would like to thank Philip Arestis, Jerry Coakley and Mike Cowen for their useful comments.

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.

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