Effect of Credit Cooperatives in Employment Generation: Evidence from Rural Nepal

Shankar Ghimire, Nicholas Sexton, Taylor Rigatti


Small-scale lending services have become increasingly prevalent among rural communities in the developing world. Many entrepreneurs seek the services of credit cooperatives to fund their initial business ventures. These loans can have an enormous impact on the business’s success, including its ability to generate employment opportunities. This paper, in particular, studies the impact of micro loans from credit cooperatives on employment generation and hiring capacity of the small businesses in Kabre Village Development Committee in the Dolakha District of Nepal. The paper uses the census approach to data collection, utilizing both quantitative and qualitative methods. The findings suggest that the majority of the credit beneficiaries are able to increase self-employment, which enables them to support their families. However, the potential for new job creation that would subdue the problem of excess demand for employment in the area is minimal. The study suggests that credit cooperatives should expand their services to include more training opportunities that would improve the hiring capacity of the local businesses. These changes would foster business growth among rural entrepreneurs, allowing them to hire more employees to address the challenges of high unemployment rate in the rural areas of Nepal.




Microfinance, Credit Cooperatives, Employment Generation

Full Text:



Al Mamun, A., Abdul Wahab, S., & Malarvizhi, C. A. (2011). Examining the effect of microcredit on employment in Peninsular Malaysia. Journal of Sustainable Development, 4(2), 174-183.

Adhikari, D.B., & Shrestha, J. (2013). Economic impact of microfinance in Nepal: A case study of the Manamaiju Village Development Committee, Kathmandu. Economic Journal of Development Issues, 15&16(1-2), 36-49.


Aoki, C., & Pradhan, P. K. (2013). Impact of microfinance services on socio-economic empowerment of the women’s group in Nepal. Geography of Governance: Dynamics for Local Development, 1, 01-10.

Babajide, A. (2012). Effects of microfinance on micro and small enterprises (MSES) growth in Nigeria. Asian Economic and Financial Review, 2(3), 463 – 477.

Banerjee, A., Duflo, E., Glennerster, R., & Kinnan, C. (2015). The miracle of microfinance? Evidence from a randomized evaluation. American Economic Journal: Applied Economics, 7(1), 22-53.

Banerjee, A. V. (2013). Microcredit under the microscope: what have we learned in the past two decades, and what do we need to know? Annual Review of Economics, 5(1), 487-519.

Caliendo, M., & Kopeinig, S. (2008). Some practical guidance for the implementation of propensity score matching. Journal of Economic Surveys, 22(1), 31-72.

CIA (2008). Central Intellegence Agency. Nepal. In The World Factbook. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/np.html on Oct. 25, 2016.

Ekunwe, P. A., Orewa, S. I., Abulu, M. O., & Egware, R. A. (2015). Micro-credit access and profitability on crop production in Orhionmwon Local Government area of Edo State, Nigeria. Journal of Applied Sciences and Environmental Management, 19(1), 81-87.

Girabi, F., & Mwakaje, A. E. G. (2013). Impact of microfinance on smallholder farm productivity in Tanzania: The case of Iramba district. Asian Economic and Financial Review, 3(2), 227-242.

Husain, Z., Mukerjee, D., & Dutta, M. (2014). Self‐help groups and empowerment of women: Self‐selection, or actual benefits?. Journal of International Development, 26(4), 422-437.

Iqbal, Z., Iqbal, S., & Mushtaq, M. A. (2015). Impact of microfinance on poverty alleviation: The study of District Bahawal Nagar, Punjab, Pakistan. Management and Administrative Sciences Review, 4(3), 487-503.

Jia, X., Xiang, C., & Huang, J. (2013). Microfinance, self-employment, and entrepreneurs in less developed areas of rural China. China Economic Review, 27, 94-103.

Kanayo, O., Jumare, F., & Nancy, S. (2013). Challenges of microfinance access in Nigeria: Implications for entrepreneurship development. Mediterranean Journal of Social Sciences, 4(6), 611-618.

Khan, K., Khan H., & Khan, Z. (2008). Impact of agricultural credit on farm productivity and income of farmers in mountainous agriculture in northern Pakistan: A case study of selected villages in district Chitral. Sarhad Journal of Agriculture, 24(4), 713-718.

Khan, R. E. A., & Noreen, S. (2012). Microfinance and women empowerment: A case study of District Bahawalpur (Pakistan). African Journal of Business Management, 6(12), 4514 - 4521.

Khandker, S. R., Samad, H. A., & Khan, Z. H. (1998). Income and employment effects of micro‐credit programmes: Village‐level evidence from Bangladesh. The Journal of Development Studies, 35(2), 96-124.

Kumar, D., Hossain, A., & Gope, M. C. (2015). Role of micro credit program in empowering rural women in Bangladesh: A study on Grameen Bank Bangladesh Limited. Asian Business Review, 3(4), 114-120.

Ngoasong, M. Z., & Kimbu, A. N. (2016). Informal microfinance institutions and development- led tourism entrepreneurship. Tourism Management, 52, 430-439.

Nilakantan, R., Datta, S. C., Sinha, P., & Datta, S. K. (2013). The impact of microfinance on women empowerment: Evidence from Eastern India. International Journal of Development and Conflict, 3(1), 27-40.

Okafor, I. G. (2016). The Impact of Microfinance Banks Activities on Employment Generation in Nigeria. Imperial Journal of Interdisciplinary Research, 2(6), 685-692.

Pathak, H. P., & Gyawali, M. (2012). Role of microfinance in employment generation: A case study of microfinance program of Paschimanchal Grameen Bikash Bank. Journal of Nepalese Business Studies, 7(1), 31-38.

Rehman, H., Moazzam, A., & Ansari, N. (2015). Role of microfinance institutions in women empowerment: A case study of Akhuwat, Pakistan. South Asian Studies, 30(1), 107-125.

Sial, M. H., Awan, M. S., & Waqas, M. (2011). Role of institutional credit on agricultural production: A time series analysis of Pakistan. International Journal of Economics and Finance, 3(2), 126-132.

Siddiqui, K. A., & Gilal, F. G. (2012). Perceptions towards microfinance in Pakistan. Asian Journal of Business and Management Sciences, 1(10), 6-10.

Smallbone, D., Welter, F., & Ateljevic, J. (2013). Entrepreneurship in emerging market economies: Contemporary issues and perspectives. International Small Business Journal, 32(2), 113-116. http://dx.doi.org/10.1177%2F0266242613511479

Tibi, K. N., & Adaigho, D. O. (2015). Impact of microfinance on small-scale poultry production in delta state, Nigeria. IOSR Journal of Agriculture and Veterinary Sciences (ISOR- JAVS), 8(2), 01-07.

World Bank (2015). Global financial development report 2015-2016: long-term finance. Global financial development report. Washington, D.C.: World Bank Group.


  • There are currently no refbacks.

Copyright (c) 2017 Shankar Ghimire, Nicholas Sexton, Taylor Rigatti

Journal of Development Innovations

ISSN 2371-9540

Copyright © KarmaQuest International