EFFECTS OF MICROFINANCE BANK’S ASSETS AND PRODUCTS ON POVERTY REDUCTION IN NIGERIA

Abstract

This study investigates the effect of microfinance banks assets and products on poverty reduction in Nigeria. Specifically, it examines the impact of capital adequacy ratio, liquidity ratio, loan-to-deposit ratio, and monetary policy rate on the poverty rate. Using secondary data from the first quarter of 2008 to the fourth quarter of 2023, the study employs Vector Autoregression (VAR) analysis to assess these relationships. The findings indicate that the monetary policy rate has a positive and significant impact on the poverty rate, whereas the loan-to-deposit ratio, liquidity ratio, and capital adequacy ratio exhibit a negative and significant influence on poverty reduction. Based on these insights, the study recommends that microfinance banks enhance loan accessibility, strengthen capital reserves, and promote financial inclusion. Additionally, policymakers should regulate interest rates effectively and implement gender-inclusive strategies to support poverty alleviation efforts