Microfinance and Sustainable Finance : Bridging Financial Inclusion and Household Well-Being
DOI:
https://doi.org/10.66635/s2debv31Keywords:
Microfinance, Sustainable Finance, Financial Inclusion, Household Well-Being, Financial Resilience, Socio-Economic DevelopmentAbstract
The concept of sustainable finance has traditionally been associated with environmental, social, and governance (ESG) investments, green finance, and institutional financing mechanisms. However, the role of microfinance as a grassroots-level sustainable finance mechanism remains underexplored. Microfinance facilitates access to financial services for economically disadvantaged households, thereby promoting financial inclusion and improving socio-economic well-being. This paper examines the relationship between microfinance, financial inclusion, and household well-being within the broader framework of sustainable finance. The study proposes a conceptual model in which financial inclusion acts as a mediating mechanism through which microfinance contributes to household well-being. Drawing upon Financial Inclusion Theory, Sustainable Development Theory, and the Capability Approach, the paper argues that microfinance extends beyond credit provision and contributes to long-term household resilience, income stability, asset creation, and social development. The paper further proposes an empirical framework using Structural Equation Modelling (SEM) to test the relationships among the variables. The findings are expected to demonstrate that microfinance serves as a sustainable finance mechanism by strengthening financial inclusion and enhancing household welfare.
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