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The Role of Islamic Microfinance in Promoting Economic Development in Nigeria
Abstract
Purpose – The purpose of this study is to assess the effect of Islamic microfinance on Nigeria’s economic development using panel data covering the period 2010–2022.
Methodology - A quasi-experimental ex-post facto research design was used. Likewise, panel econometric methods of estimation were applied to address heterogeneity, stationarity, and long-run relationships. The Hausman test outcome informed the choice of the Fixed Effects model as it showed the relevance of controlling for time-invariant regional influences.
Findings - Empirical evidence showed that, as measured by GDP per capita, Islamic microfinance had a statistically significant and good impact on economic growth; unemployment and inflation showed negative impacts. Qualitative data further buttress the analysis by providing further insight into the socio-cultural and operational dynamics affecting Islamic banking in Nigeria.
Implication - The study finds that inclusive economic growth is best achieved by Islamic microfinance, but it also calls for policy support, more interest among stakeholders, and regulatory improvement. Although small variances were observed concerning the effect size across sectors, these results are in line with earlier studies confirming the developmental role of Islamic finance.
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DOI: https://doi.org/10.17509/rief.v8i2.84263
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