The role of microfinance and the problem of financial services gap in Tanzania

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Date
2013
Journal Title
Journal ISSN
Volume Title
Publisher
University of Dar es Salaam
Abstract
The main objective of the study was to shade light on the role of microfinance and the problem of financial services gap in Tanzania by examining the factors that account for financial services gap in Tanzania by examining the factors that account for financial services gap in Tanzania which, in turn prevents people from investing in economic activities, smoothing consumption and reduce poverty. In relation to financial services exclusion, the objective of this study was to investigate households’ demand for microfinance services; sources of cost (in) efficiency; and a trade – off between efficiency and outreach of microfinance institutions. The study used cross sectional data from mainland Tanzania and Zanzibar and logit model to investigate determinants of demand for loan and savings. To examine cost (in) efficiency and a trade-off between efficiency and outreach of microfinance institutions, the study used an unbalanced panel data from microfinance institutions in mainland Tanzania and Zanzibar. A translog cost function was used to predict cost-inefficiency and a trade – off between efficiency and outreach of microfinance institution. The descriptive and empirical results show that financial institutions’ and households’ characteristics are among the factors which contribute to financial services gap in Tanzania. The results also showed that, microfinance institutions are not full cost-efficient and there is a trade – off between efficiency and outreach of microfinance institutions. Thus, financial services gap is still a problem in Tanzania. The results from this study therefore, suggest for a policy mix that would stimulate effective demand for microfinance services, efficiency and outreach of microfinance institutions necessary for reducing or closing the financial services gap.
Description
Available in printed form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HG187.5.T34A87)
Keywords
Microfinance Institutions, Financial services, Tanzania
Citation
Assey, Deogratias E, (2013) The role of microfinance and the problem of financial services gap in Tanzania. Doctoral dissertation, University of Dar es Salaam. Dar es Salaam.
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