Abstract/Summary

Developing countries often seek to improve the welfare of their citizens by strengthening their banking systems and deploying microfinance for the financially excluded. However, quite often, the same rigour is not applied to probe whether the policies have the intended outcomes. Resilient banking systems and access to credit are considered a pathway to economic development but limited research has been conducted in developing countries. Specifically, the impact of the whole suite of the Basel II/III reforms in Africa has never been assessed. Although there have been several studies on the impact of microfinance on poverty reduction, a consensus on its benefits has not been reached. The divergent views leave policymakers uncertain as to whether to continue to adopt international best practice reforms. Using quantitative and qualitative research methods, this thesis comprehensively investigates the impact of the Basel II/III reforms on banking system resilience in Africa and the impact of microfinance on poverty alleviation in developing countries globally. The potential of developing countries to contribute to global markets when this potential is stagnating in other parts of the world underscores the importance of this study. The potential spill-over effect of unabated poverty is an additional factor. The study finds that achieving banking system resilience in Africa through the implementation of Basel II/III is highly dependent on compliance with regulatory requirements, limiting leverage, and the macroeconomic environment. Microfinance was found to improve some dimensions of economic welfare but requires a massive deployment and other development tools to have a significant impact. Economic shocks such as COVID-19 adversely affect microfinance institutions and households. A major contribution of this research is that it makes explicit the connection between the issue of bank regulation/reform and the issue of microfinance, and how these both interact with the issue of poverty and poverty reduction.