Abstract
M.Com. (Development Economics)
Worldwide, poverty remains to be an obstacle to achieve sustainable development and improve the well-being of people. Microloans have become a popular policy tool for poverty alleviation and is part of the larger microfinance industry. It is used in many developing countries as one of the approaches in their poverty alleviation programs. Microloans are based on the principle that poor people can initiate their own development out of poverty, given they have the starting capital to do so. The capital can be invested in income-generating activities which, it is assumed, will lead to a higher income and additional positive effects, like an increase in well-being. However, others argue that the focus on income is only one aspect of poverty. Other forms of deprivation, such as education, health and a lack of subjective well-being should also be considered. The main and primary research aim of this minor dissertation is to investigate how access to microloans is related to the subjective well-being of the poor and, secondly, to investigate if the relationship with microloans is the same for both male and female borrowers. To analyse these research questions we make use of a data set collected by the Gauteng City-Region Observatory (GCRO) in 2015 on the quality of life of the people in the province. The results from our analysis show that microloans are negatively related to the subjective well-being of the poor, meaning that the subjective well-being of the poor in Gauteng does not improve though access to microloans. This finding contravenes the notion of microloans being a policy measure to address poverty through the alleviation of poverty and improving subjective well-being. For further analysis we added an interaction variable, where the microloan variable is multiplied by the gender variable. We found positive and significant results which indicate that males and females who have a microloan might have different experiences regarding their subjective well-being. Pursuing this matter further, we analysed and compared the results of a male and a female subsample. We found that although the microloan variable is only statistically significant in the female sample, the direction of the relationship in the two subsamples differs. In the male subsample the relationship between microloan and subjective well-being is positive, but the opposite was found in the female sample, thus emphasising that gender matters when analysing the relationship between microloans and subjective well-being. Furthermore, the results show that the standard factors found to explain the subjective well-being of people are also relevant for the poor in Gauteng, the economic centre of South Africa. This shows that there...