Revisión de la Revista Árabe de Negocios y Gestión

The Impact of Microfinance Lending on Economic Growth in Egypt

Abstract

Hala El Hadidi*

The study seeks to examine the impact of microfinance institution on economic growth using Egypt as a case study. The study employs the multiple regression analysis given the data is cross-sectional and time series in nature. Secondary data of all commercial banks were extracted from the Central Bank of Egypt and Annual Reports. Data used in this model are time series secondary data for the period 2003 to 2018.The findings of the study show that microfinance loans have a significant positive impact on the short run economic performance in Egypt. Microfinance loans enhanced consumption per capita in short-run with an impressive coefficient, although these banks’ loans do not have a significant impact on economic growth in the long-run. Microfinance investment however, has a significant impact on economic performance in Egypt in the long-run. Although microfinance loans are relevant in growth process in Egypt, other measures such as boosting agricultural production and taking appropriate steps to enhance per capita income are equally important in boosting the Egyptian economic growth. It was recommended that microfinance institutions should loan to improve consumption in the short- run, while the long-run goal should be to improve investment and other capital accumulation.