Impact of Microfinance on Poverty

Abstract

The primary objective of this thesis is to analyze the impact of microfinancing on poverty through a sample survey of four microfinance institutions, using concepts: like household income/expenditure, asset holdings and diversity, education and various measures of vulnerability at household and enterprise level. The study employed the tool developed in collaboration by Assessing the Impact of Microenterprise Services (AIMS) and Small Enterprise Education and Promotion network (SEEP). The tool has been modified in the local context. Face to face structured interviewing was used to collect primary data. Chi square test is used to analyze the difference between incoming (Less than one year) and established clients (2-5 years) on the basis of poverty indicators established at household and enterprise level. Role of demographic and other independent variable is analyzed with the help of multinomial regression analysis. The evidence turns out to be mixed one like (i) strong positive impact on children education and enterprise financial performance. (ii) mixed evidence on food security, household expenditures and household assets and no impact has been observed on housing and income smoothening of enterprise. Present study can be very useful to IA practitioners and policy makers. This research has made a significant contribution in unraveling some of the myths of microfinance hence advancing literature and research on this important issue. Keywords: Microfinance, Poverty Alleviation, Household Welfare, Enterprise Management, Impact Assessment.