Bodnar Olena, PhD (Economics), Assistant Professor of the Department of Finance, Banking and Insurance, Mykolayiv National Agrarian University, Mykolayiv, Ukraine

ORCID ID: 0000-0002-0152-4290
e-mail: bodnarolena1606@gmail.com

The impact of microfinance services on economic development

Abstract. Introduction. The main purpose of microfinance is to improve the financial situation of the population and increase the economic development of a country or a region. Consumers of microfinance services are citizens with low-income, retirees, students, people who have fallen on hard times, as well as people who plan to start their own business. However, with the development of market relations, the need for financial services arises among farmers, entrepreneurs of small and medium-sized businesses.

Purpose. The main purpose of the academic paper is to analyze the dynamics of microfinance services and assess their impact on the entrepreneurial activity of small and medium-sized enterprises and the consequences for the population.

Results. Methods of generalization, analysis, comparison, correlation and regression analysis have been used in order to achieve the purpose outlined. The academic paper considers the impact of microfinance services on the performance of small and medium-sized enterprises in the form of net profit. The results have showed that the impact of the cost of microfinance services on the development of financial activities of small and medium-sized businesses have a positive result, and, when using the proposed regression equation, the company will receive positive results in 2021-2025. The conducted correlation analysis of the impact of microfinance services on the level of the average salary of the population of Ukraine has revealed a high level of dependence of citizens on loans obtained. This is confirmed by the high correlation coefficient.

Conclusions. The results of the research have showed a positive impact on improving the financial situation of both enterprises and population. It has been proven that for small and medium-sized businesses, the involvement of microfinance services in financial activities has a positive result in the form of an increase in net profit. Microloans are most in demand among the population. However, the question remains debatable whether the main function of microfinance is improving the living standards of the population, forasmuch as microfinance institutions provide services for low-income segments of the population, giving a small amount of loans, while requiring a high interest rate to cover the cost of the service, associated with a loan. The issue of improving the living standards of the population through the use of microfinance services needs further research.

Keywords: microfinance; microfinancial services; microcredit; microinsurance; microdeposits.

References:

1. Vergun, A., & Matvinko, S. M. (2020). The Role of ThatProspects in Rosvitku Microcredituvanna inKranakh, Scho Rosvivats. Effective economics, 2. Retrieved from https://doi.org/10.32702 / 2307-2105-2020.2.68 [in Ukrainian].
2. Sodoma, R., Cherevko, H., Krupyak, I.,Andrusyak, H., Brodskaya, I. & Shmatkovskaya, T.(2021). Regulating the credit market and theprospects for stabilization of the financialsector of Ukraine. Financial-Credit Divalence: Property, 36, 7-8. DOI: https://doi.org/10.18371/fcaptp.v1i36.227604 [in Ukrainian].
3. Shiriyan, A. & Shiriyan, L. V.(2020). Microinsurance ofthe unhealthy population and small business in the safety system. Effective economy,12. DOI: https://doi.org/10.32702/2307-2105-2020.12.204 [in Ukrainian].
4. Rekunenko,I., Hrytsenko, L. L., Boiarko, I. M. & Kostyrko R. O. (2019). Financial Glybin to the Market in the System of Indicators in the Development of the Economy of the Country. Financial and credit activity: problems of theory and practice, 2 (29), 430-439 DOI: https://doi.org/10.18371/fcaptp.v2i29.171892. [in English].
5. Kravchenko, O. (2017). Analysis of the level andquality of life of the population in the minds ofeconomic and political instability. Bulletin of Mykolaivsky National University of V.O. Sukhomlinsky, 17, 573-574. Retrieved from http://nbuv.gov.ua/UJRN/molv_2017_3_162 [in Ukrainian].
6. Krasnomovets, V. (2014). The current state of affairsin the main direct movement of the population.Financial Space, 4 (16), 109-110. Retrieved from http://nbuv.gov.ua/UJRN/Fin_pr_2014_4_16 [in Ukrainian].
7. Mammadov, I. & Ahmadov, F. (2021). FinancialDevelopment and Economic Growth: Evidencefrom Azerbaijan. WSEAS Transactions on Business and Economics, 18, 237-252 [in English].
8. Malinoshevska, K., Martyshyn, D., Perestyuk, I.,Panchenko, S. & Omarov, A. (2021). Management ofFinancial and Economic Development ofBorder Regions of Ukraine. WSEAS Transactions on Business and Economics, 18, 595-605. [in English].
9. Yekimov, S., Nianko, V., Sirenko, N., Burkovska, A. & Bodnar, O. (2021). The Problem of Attracting Private Investment in Agriculture. In: Muratov A., Ignateva S. (eds) Fundamental and Applied Scientific Research in the Development of Agriculture in the Far East (AFE-2021). AFE 2021. Lecture Notes in Networks and Systems, vol 353. Springer, Cham. https://doi.org/10.1007/978-3-030-91402-8_7 [in English].
10. Volga, V. (2015). International models andtechnologies for micro-finance of small andmiddle business. Business-Inform, 3, 210-212 [in Ukrainian].
11. Tadjibaeva, D., Burkhanov, U.A. & Masharipova N. U. (2018). Financial inclusion and microfinance: study guide. Tashkent: Baktria press [in English].
12. Abrar ,A. (2019). The impact of financial and socialperformance of microfinance institutions onlending interest rate: A cross-country evidence.Cogent Business & Management. DOI: https://doi.org/10.1080/23311975.2018.154007 2 [in English].
13. National Bank of Ukraine (2021). Official web-site. Retrieved from https://bank.gov.ua/ua/news/all/finansoviustanovi-budut-zobovyazani-rozkrivati-povnuvartist-mikrokreditiv [in Ukr.].
14. Rates on microloans in MFIs of Ukraine (2021). Ministry of Finance ofOfficial web-site. Retrieved from https://index.minfin.com.ua/ua/banks/credit/micro/ [in Ukr.].
15. The main indicators of living standards: informs the Ministry of Social Policy (2021). Professional Socialist Partyof Ukraine’s Workers. Official web-site. Retrieved from https://pon.org.ua/novyny/8350-osnovnpokazniki-rvnya-zhittya-naselennya-nformuyemnsocpoltiki.html [in Ukr].
16. Centurelli, G., Porretta, P. & Santoboni F. (2016). EU Cohesion Policy and Microfinance. In: Pes G.N., Porretta P. (eds) Microfinance, EU Structural Funds and Capacity Building for Managing Authorities. Palgrave Studies in Impact Finance. Palgrave Macmillan, London. Retrieved from https://doi.org/10.1057/9781137536020_2 [in English].
17. Cardente, A. et al. (2016). Microfinance and Capacity Building in the EU Policy. In: Pes G.N., Porretta P. (eds) Microfinance, EU Structural Funds and Capacity Building for Managing Authorities. Palgrave Studies in Impact Finance. Palgrave Macmillan, London. Retrieved from https://doi.org/10.1057/9781137536020_4. [in English].
18. Pytkowska, J. (2021). Microfinance in Europe: SurveyReport 2020 edition. Retrieved from https://doi.org/10.13140/RG.2.2.18355.35367 [in English].
19. Brickell, K., Picchioni, F., Natarajan, N. et al. (2020). Compounding crises of social reproduction: Microfinance, over-indebtedness and the COVID-19 pandemic. World Development, 136(4). Retrieved from https://doi.org/: 0.1016/j.worlddev.2020.105087 [in English].