Forty Years of Microfinance Research and Its Impact on Consumers: A Review and Research Agenda Using the ADO-TCM Framework

Abstract

Over the past 40 years, microfinance has been widely used to support self-employment, reduce poverty, and empower economically disadvantaged groups. As microfinance products target underserved individuals and households, this research critically explores their impact on consumers' economic behavior, access to services, and well-being. This paper systematically reviews the microfinance literature from 1982 to 2023, applying the ADO (antecedents, decisions, and outcomes) and TCM (theories, contexts, and methods) frameworks. This study employs bibliometric analysis as the primary method, complemented by systematic literature review (SLR) principles to ensure a structured and comprehensive examination. Findings synthesized through the ADO-TCM framework offer a comprehensive analysis of the trends and gaps in, and the impacts of microfinance studies. Key findings include the identification of three principal research areas: financial inclusion as a foundational antecedent, sustainability, and governance mechanisms driving institutional decisions, and poverty alleviation as a measurable outcome of microfinance programs. This dual approach offers a nuanced perspective on microfinance, examining the adaptability of financial solutions and the contextual limitations that affect their impact. The study contributes to the field by refining the ADO-TCM framework, bridging theoretical constructs and practical applications, and pinpointing critical research gaps, such as the need for gender-sensitive models and psychological studies of group lending. Our bibliometric analysis highlights trends, identifies research gaps, and organizes the literature into themes: financial inclusion, institutional sustainability, and poverty alleviation. Content analyses reveal core research streams and provide a conceptual framework for ADO, along with associated TCM. The review identifies significant issues, such as debt dependency, mixed sociocultural impacts, and sustainability concerns, offering a balanced assessment for scholars, policymakers, and practitioners. These insights advance our understanding of microfinance dynamics and propose actionable directions for future research. This comprehensive overview lays a foundation for future research, promoting an informed understanding of microfinance's potential and its limitations as a tool for financial inclusion and how these affect the consumption behavior, risk mitigation, and financial inclusion of low-income consumers.