Determinants of Microfinance Activities in Poverty Reduction in Tanzania

Abstract

Microfinance activities are an important area of socioeconomic development worldwide, as they foster economic growth and reduce poverty across nations. However, studies examining their impact in fast growing commercial hubs in Africa are limited. Thus, this study set out to bridge that glaring gap by examining the determinants of microfinance activities and their impact on poverty reduction in Dar es Salaam, Tanzania. The study applied the Life cycle Consumption Theory coupled with the Theory of Reasoned Action , to examine the phenomenon at issue. The survey strategy assisted in data collection, which, given the nature of unreliable internet services, was conducted through a delivery and collection questionnaire. In all, 315 respondents from the sample participated in the study, after which decriptive and inferential analyses were applied to enrich our understanding. Community income, community savings and attitude emerged as the predictors of poverty reduction. In this undertaking, the study advances existing knowledge by building upon a parsimonious model that expanded the theoretical and conceptual understanding of microfinance activities, thereby supporting the development of effective microfinance initiatives in Tanzania to enhance the nation's economic development. 

Issue Section: Finance and Accounting