THE IMPACTS OF A MICROFINANCE LENDING SCHEME ON CLIENTS IN GHANA

Owning to the success of the Grameen Bank and other microfinance institutions in recent years, microfinance institutions’ role as a potential policy tool in poverty alleviation has received considerable attention. Empirical evidence from existing research shows some positive results in poverty reduction from some microfinance programs. This paper adds to existing literature on the industry by evaluating the effects of microfinance on clients who have received loans from the Sinapi Aba Trust of Ghana. Our data show that earlier clients in the program received greater impacts and are more empowered from the program than new clients, even though the latter on average receive larger volumes of credit. We construct empowerment indicators, finding that years of membership duration with the SAT lending scheme matters in empowering clients. The results show that old clients are more likely to purchase assets, expand their businesses, and spend larger amounts on their children’s education than new clients.