A Study on “Role of Microfinance in Transforming Rural Economies" with Reference to Bangalore Rural

Authors

  • S Ayyappan Professor, School of Management Studies, CMR University, Bengaluru, Karnataka, India
  • Shivashankarachar Y Ph.D Research Scholar, School of Management Studies, CMR University, Bengaluru, Karnataka, India

DOI:

https://doi.org/10.5281/zenodo.15128828

Keywords:

microfinance, rural, economics, msme

Abstract

Microfinance has develop a vital device for fostering economic expansion in rural areas by addressing the financial needs of underserved communities. This study examines the role of microfinance in transforming rural economies, with a focus on Bangalore Rural, highlighting its impact on income generation, entrepreneurship, and women empowerment. Through small loans, savings mechanisms, and financial literacy programs, microfinance institutions (MFIs) have enabled marginalized populations to overcome barriers to economic participation. Primary data collected from structured interviews with beneficiaries and secondary analysis of MFI reports reveal significant improvements in household income, reduced reliance on informal credit sources, and increased self-employment opportunities. Women, in particular, reported enhanced financial decision-making power and confidence, showcasing the potential of microfinance in promoting gender equity. Despite its benefits, microfinance faces challenges such as high interest rates, limited repayment capacities, and restricted access in remote areas, highlighting the need for policy interventions to regulate costs, improve financial literacy, and extend service coverage. This study emphasizes the crucial role of microfinance in reducing poverty, promoting inclusive growth, and supporting sustainable livelihoods in rural economies. It offers actionable insights for policymakers, microfinance institutions (MFIs), and development practitioners seeking to harness microfinance as a catalyst for comprehensive rural transformation.

Downloads

Download data is not yet available.

References

Adams, D. W., & Vogel, R. C. (2014). Microfinance approaches for rural economies. Journal of Development Studies, 50(3), 255-271. https://doi.org/10.1080/00220388.2014.873392.

Armendáriz, B., & Morduch, J. (2010). The economics of microfinance. (2nd ed.). The MIT Press.

Basu, P., & Srivastava, P. (2005). Scaling-up microfinance for India's rural poor. World Bank Policy Research Working Paper No. 3646. https://doi.org/10.1596/1813-9450-3646.

CGAP. (2016). Microfinance in India: Trends and challenges. Consultative Group to Assist the Poor. Retrieved from: https://www.cgap.org.

Chakrabarti, R., & Ravi, S. (2011). At the crossroads: Microfinance in India. Viewpoint, 2(3), 19-26.

Das, S. K. (2012). Microfinance and rural development: A study of selected districts in West Bengal. Indian Journal of Economics and Development, 8(2), 35-50.

Desai, V. (2007). Microfinance in India: Transforming rural lives. Concept Publishing Company.

Ghate, P. (2007). Indian microfinance: The challenges of rapid growth. SAGE Publications.

Hulme, D., & Arun, T. (2011). What's wrong with microfinance?. Practical Action Publishing.

India Microfinance Report. (2020). A snapshot of the microfinance sector in India. Sa-Dhan. Retrieved from: https://www.sa-dhan.net.

Karmakar, K. G. (2008). Microfinance in India. SAGE Publications.

Ledgerwood, J., & Gibson, A. (2013). Transforming microfinance institutions: Providing full financial services to the poor. World Bank Publications.

Mahajan, V., & Ramola, B. G. (2003). Financial services for the rural poor in India: Access and sustainability. Journal of Microfinance, 5(2), 57-78.

Morduch, J. (1999). The microfinance promise. Journal of Economic Literature, 37(4), 1569-1614.

NABARD. (2019). Status of microfinance in India 2018-19. Retrieved from: https://www.nabard.org.

Nair, T. S. (2010). Commercial microfinance and social responsibility: A critique. Economic and Political Weekly, 45(31), 32-37.

National Bank for Agriculture and Rural Development (NABARD). (2017). Microfinance in rural India. Retrieved from: https://www.nabard.org.

Pitt, M. M., & Khandker, S. R. (1998). The impact of group-based credit programs on poor households in Bangladesh: Does the gender of participants matter?. Journal of Political Economy, 106(5), 958-996.

Rao, N. (2014). Microfinance and rural women's empowerment: Evidence from India. Development in Practice, 24(3), 307-320. https://doi.org/10.1080/09614524.2014.899561.

Robinson, M. S. (2001). The microfinance revolution: Sustainable finance for the poor. World Bank Publications.

Rutherford, S. (2000). The poor and their money. Oxford University Press.

Seibel, H. D. (2005). Does history matter? The old and the new world of microfinance in Europe and Asia. Journal of Microfinance, 7(1), 33-54.

Sharma, P. (2011). Impact of microfinance on livelihood, empowerment and poverty alleviation of rural poor. Journal of Rural Development, 30(4), 451-463.

Srinivasan, N. (2011). Microfinance India: State of the sector report 2011. SAGE Publications.

Swain, R. B., & Wallentin, F. Y. (2009). Does microfinance empower women? Evidence from self-help groups in India. International Review of Applied Economics, 23(5), 541-556.

Taylor, M. (2011). Freedom from poverty is not for free: Rural development and the microfinance crisis in Andhra Pradesh, India. Journal of Agrarian Change, 11(4), 484-504.

United Nations Development Programme (UNDP). (2015). Microfinance in India: Bridging the gap between the rich and the poor. UNDP Reports. Retrieved from: https://www.undp.org.

World Bank. (2012). Financial inclusion in rural India: The role of microfinance. World Bank Publications.

Yunus, M. (2007). Creating a world without poverty: Social business and the future of capitalism. Public Affairs.

Zeller, M., & Meyer, R. L. (2002). The triangle of microfinance: Financial sustainability, outreach, and impact. Johns Hopkins University Press.

Downloads

Published

28-03-2025

How to Cite

Ayyappan, S., & Shivashankarachar, Y. (2025). A Study on “Role of Microfinance in Transforming Rural Economies" with Reference to Bangalore Rural. Social Science Journal for Advanced Research, 5(2), 61–67. https://doi.org/10.5281/zenodo.15128828

Issue

Vol. 5 No. 2 (2025): March Issue

Section

Articles

ARK

https://n2t.net/ark:/62934/ssjar.v5i2.235

License

Copyright (c) 2025 S Ayyappan, Shivashankarachar Y

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Research Articles in 'Social Science Journal for Advanced Research' are Open Access articles published under the Creative Commons CC BY License Creative Commons Attribution 4.0 International License http://creativecommons.org/licenses/by/4.0/. This license allows you to share – copy and redistribute the material in any medium or format. Adapt – remix, transform, and build upon the material for any purpose, even commercially.