On the Interplay between Microfinance and Sustainable Development: Evidence from MENA Countries

In this paper, we attempt to examine the relationship between microfinance and sustainable development for 10 MENA countries over the period 1990-2018. To this end, we use a multi-step approach based on different statistical tests and econometric models (STAR, ESTAR, LSTAR, and STECM). The empirical results clearly show a positive and significant relationship between the indicators of microfinance and sustainable development. By offering the opportunity to access microcredit, microfinance institutions can contribute to reinforcing sustainable development. Therefore, households should be encouraged to create investment opportunities and increase their demand for microcredit Our empirical analysis establishes a positive and significant relationship between microfinance indicators and sustainable development. Such a relationship seems to be dynamic over time and especially significant during short-term. Therefore, by providing the possibility to access microcredit, microfinance institutions can contribute to boosting sustainable development. Accordingly, the present study contributes to the literature on microfinance by providing convincing evidence that microfinance and microcredit have a significant effect on sustainable development.