2025, Vol. 6, Issue 1, Part N
Financial inclusion in times of conflict: Reviewing the role of microfinance in fragile state economies
Author(s): Shekiba Zafari and Saidalavi K
Abstract: Because of weakened institutions, increased poverty, and damaged infrastructure, fragile and conflict-affected states frequently experience extreme financial exclusion. Although microfinance has become a viable instrument for closing this gap, its effectiveness in such unstable environments is still debatable. Using data from conflict areas in Africa (such as South Sudan and Somalia), the Middle East (such as Yemen), and Asia (such as Afghanistan), this paper thoroughly examines the contribution of microfinance to the advancement of financial inclusion in fragile and conflict-affected states. While research shows that microfinance can improve household resilience by supporting livelihoods, empowering women through targeted credit access, and providing emergency liquidity, its effects are significantly mediated by local factors such as cultural barriers, informal financial networks, and security risks. The study emphasises important trade-offs: top-down interventions may worsen marginalised groups' exclusion, and microfinance institutions frequently struggle with sustainability in low-trust environments. The paper provides policy recommendations for integrating mobile banking technologies and community-led oversight mechanisms, among other ways to adapt microfinance models to conflict settings, by combining lessons learnt from various cases. It also points out areas that require more study, such as the role of hybrid (formal-informal) financial systems and the long-term impacts of microfinance on the economic recovery following a conflict.
DOI: 10.22271/27084515.2025.v6.i1n.586
Pages: 1251-1255 | Views: 70 | Downloads: 35
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How to cite this article:
Shekiba Zafari, Saidalavi K. Financial inclusion in times of conflict: Reviewing the role of microfinance in fragile state economies. Asian J Manage Commerce 2025;6(1):1251-1255. DOI: 10.22271/27084515.2025.v6.i1n.586
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