Analysis the Impact of Microfinance on Poverty Reduction

Abstract

Purpose: Living  standard  in  low  income  developing  countries  always  remain  crucial  issue to  be addressed.   In many developing countries, like Pakistan, microfinance has been used as a tool to gear up the living standard of poor people. The main aim of this  study  is  to  analyze  the contribution of microfinance  in raising  the  living standard of  low  income people and poverty reduction. This paper is about reducing the poverty level through micro financing.

Design/methodology/approach: The researcher developed a questionnaire to examine the impact of microfinance for the development of poor people in Pakistan. In this study Content analysis is used to investigate the impact of micro finance on poverty reduction.

Findings: The micro finance has the positive impact on poverty reduction and increase income level, education and develops the living standard of poor. The loan size will have the positive or negative effect on the people. There are many issues which are faces by the people for getting loan from financial institutions.

Research limitations/implications: This research focuses upon a relatively small sample of poor people in the Pakistan. Although the results could be relevant to poor people in other developing countries, caution should be exercised when attempting to generalize these finding to other contexts.

Originality/value: The analysis shows that the micro finance is important for poverty reduction. In Pakistan being a nation, approximate 70 percent of people live in rural areas and micro finance for rural being a powerful, and the only, tool for rural people in providing a means of livelihood, its importance and potential should be known to each individual.

Keywords: Pakistan, Education, Microfinance, Family health, Household income, Poverty reduction.