The impact of microfinance in economic growth in Albania: an empirical approach based on ARDL model

Abstract: Microfinance has grown rapidly in recent years in Albania with a dual mission: financial and social. The financial mission is to provide financial instruments and services to low-income individuals who would otherwise be excluded from the traditional banking system. The social mission, on the other hand, is to guarantee credit for investments and other activities to improve the social well-being of the people. Micro-credit could greatly improve the socioeconomic well-being of the recipients. The purpose of this study, starting from these elements, is to examine the effect of the microfinance has on economic and social development in a developing country such as Albania. The observation focuses on the economic transition period (2004–2021) using annual data. The analysis will make use of the autoregressive distributed lag (ARDL) model, considering the aspects of cointegration and econometric techniques to control the robustness of the results. The findings of this study indicate that microcredit portfolio volume, does not affect the real wealth of individuals in Albania. At the same time, from a social perspective, the microcredit has a positive and significant impact on employment in Albania