IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 11 NO. 1 2025
DOI: 10.56201/ijbfr.v11.no1.2025.pg20.42

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The Effects of Microfinance Banks on the Financial Wellbeing of Rural Dwellers in Bayelsa State

Odeke, Dominion Okalizibe, Obentey, Austin Amawei

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Abstract

This study examines the effect of microfinance banks on the financial wellbeing of rural dwellers in Bayelsa State, Nigeria. Utilizing an ex-post facto research design, the study analyzed data from 2008 to 2024, sourced from the Bayelsa State Ministry of Finance and Economic Planning, Central Bank of Nigeria (CBN) Statistical Bulletin, and the National Bureau of Statistics (NBS). The research focused on the impact of key microfinance bank variables—total assets, number of microfinance institutions, and micro-credits—on individual savings. An Ordinary Least Squares (OLS) regression model was employed for analysis, with diagnostic tests including Correlogram of Residuals Squared, histogram normality, Breusch- Godfrey serial correlation, and heteroskedasticity tests confirming model stability and reliability. Findings reveal that the total asset base of microfinance banks has a positive but statistically insignificant effect on individual savings, suggesting limited direct influence of asset size. Similarly, the total number of microfinance institutions positively but insignificantly impacts individual savings. Conversely, micro-credits exhibit a positive and significant effect on total individual savings, highlighting the crucial role of credit access in promoting savings behavior among rural dwellers. The study concludes that microfinance banks significantly contribute to the financial wellbeing of rural communities in Bayelsa State, primarily through credit services. Recommendations include fostering asset growth through supportive policies, incentivizing the establishment of more microfinance institutions in underserved areas, and integrating credit and savings programs to maximize their impact. Additionally, promoting financial literacy through targeted awareness campaigns is crucial for fostering a savings culture and enhancing financial inclusion.

keywords:

Microfinance banks, Financial wellbeing, Rural dwellers, Bayelsa State

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