European Journal of Accounting, Auditing and Finance Research (EJAAFR)

EA Journals


The Reviews of Microfinance and Women Empowerment in Ethiopia (Published)

According to the findings of different authors microfinance is providing financial services to unemployed and low-income individuals or groups who would have no access to formal banking services. It has a positive impact on the living standard of the poor people in particular and alleviates poverty in their households in general. It is not only undermining poverty in the city but also empowering women through surviving and making their life prosperous with dignity and self-reliance by providing financial services. And also Ethiopian Microfinance is facing different challenges in empowering such as lack of collateral assets, lack of information, work burden, production failures, verbal abuse, lack of infrastructure, low institutional capacity and opportunities of women in microfinance are providing startup capital, women empowerment, poverty eradication, social and political empowerment, improved saving skills and the above challenges listed should be taken consideration by government and concerned body as well as a problem-solving study must be conducted.

Citation: Ismael Hussein Malela(2022) The Reviews of Microfinance and Women Empowerment in Ethiopia, European Journal of Accounting, Auditing and Finance Research, Vol.10, No. 3, pp.59-75



Keywords: Collateral, Microfinance, and Ethiopia, empowering women, poverty eradication


Since the introduction of Structural Adjustment Programme (SAP) in Nigeria in the 1980’s, the financial system has witnessed excessive liberalization. Community Banks which were the main stay of the financial system have transformed to Microfinance Banks (MFB) resulting from the uncontrolled collapsed of these institutions.  The Central Bank of Nigeria (CBN) very recently introduced reforms meant to curb the high incidence of bank failures in the country that required the introduction of minimum capital requirement for the establishment of commercial Banks and MFBs. After some years of experiments, it was obvious that the reforms put in place were not adequate to stem the tide of bank failures. It was as a result of this that the Apex Bank (Central Bank of Nigeria) increase the minimum capital requirement for commercial banks to N25b ($160,000).  Many Banks could not meet this new capital requirement and were faced with the option of been merged with other stronger banks or allowed themselves to be completely taken over by other banks.  From researches done on the performance of banks, it has been proven that banks tend to do very well when the economy is also doing very well. It is on this basis that this work has been undertaken to confirm this assertion or otherwise confirm that non- performing loans tend to increase when the economy slacks into a recession.  The study found that increase in non-performing loans impacted negatively on the Gross Domestic Product in Nigeria and that increase in lending  rate and inflation rate cause non-performing loans to increase. The implication of this study is that Central bank should introduce policies that can have moderating effects on inflation and lending rates.Government should pay their loans on time and insider abuse should be eliminated from the financial system. Above all, banks should know their customers before granting loans to them, infact adhering strictly to the 5C’s of credit in modern banking practice.

Keywords: Collateral, Economy, Inflation Rate, Interest Rate, Non-Performing Loans, Reforms/Government Policies

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