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How effective is microfinance in reaching the poorest? Empirical evidence on programme outreach in rural Pakistan

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  • Asad K. Ghalib

Abstract

Microfinance has emerged on the global scale as a key strategy to reduce poverty and promote development. Most literature however, tends to concentrate on breadth as opposed to depth of programme outreach. This paper is based on a primary household survey of 1,132 respondents in the Punjab Province of Pakistan to assess which category of the poor is being served by microfinance institutions: are they the very poor, middle poor or less poor ones? In order to make comparisons, borrower (treatment) and non-borrower (control) households are ranked by poverty scores generated by employing Principal Component Analysis. The study reveals that the depth of poverty outreach is significantly lower than what has been claimed by lenders. The paper reflects on policy implications to enhance depth (as opposed to breadth) of outreach to address the needs of the ‘poorest of the poor’ in order to contribute meaningfully and effectively towards combating poverty.

Suggested Citation

  • Asad K. Ghalib, 2013. "How effective is microfinance in reaching the poorest? Empirical evidence on programme outreach in rural Pakistan," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 14(3), pages 467-480, June.
  • Handle: RePEc:taf:jbemgt:v:14:y:2013:i:3:p:467-480
    DOI: 10.3846/16111699.2011.639796
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    References listed on IDEAS

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    1. Zeller, Manfred & Sharma, Manohar & Lapenu, Cécile & Henry, Carla, 2001. "An operational tool for evaluating poverty outreach of development policies and projects," FCND discussion papers 111, International Food Policy Research Institute (IFPRI).
    2. David Hulme, 2008. "The Story of the Grameen Bank: From Subsidised Microcredit to Market-based Microfinance," Global Development Institute Working Paper Series 6008, GDI, The University of Manchester.
    3. Proloy Barua, 2006. "Targeting the Poorest in Microfinance: Poverty Outreach of BDP Ultra Poor Programme," Working Papers id:658, eSocialSciences.
    4. Marguerite S. Robinson, 2001. "The Microfinance Revolution," World Bank Publications - Books, The World Bank Group, number 28956.
    5. repec:phd:pjdevt:jpd_1997_vol__xxiv_no_2-d is not listed on IDEAS
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    1. Janda, Karel & Zetek, Pavel, 2014. "Mikrofinanční Revoluce: Aktuální Kontroverze A Výzvy [Microfinance Revolution: Recent Controversies And Challenges]," MPRA Paper 54098, University Library of Munich, Germany.
    2. Karel Janda & Pavel Zetek, 2015. "Mikrofinanční revoluce: kontroverze a výzvy [Microfinance Revolution: Controversies and Challenges]," Politická ekonomie, Prague University of Economics and Business, vol. 2015(1), pages 108-130.
    3. Janda, Karel & Zetek, Pavel, 2014. "Survey of Microfinance Controversies and Challenges," MPRA Paper 56657, University Library of Munich, Germany.
    4. Waqas Umar Latif & Sana Ullah & Wasim Ahmed & Muhammad Umar Sultan & Rana Muhammad Sohail Jafar & Muhammad Tariq & Wang Linping, 2020. "Microcredit and Economic Welfare: Experience of Poor Rural Households from Pakistan," Journal of International Development, John Wiley & Sons, Ltd., vol. 32(6), pages 976-997, August.
    5. Icíar García-Pérez & María Ángeles Fernández-Izquierdo & María Jesús Muñoz-Torres, 2020. "Microfinance Institutions Fostering Sustainable Development by Region," Sustainability, MDPI, vol. 12(7), pages 1-23, March.
    6. Syed Mohsin & Malik Fahim Bashir & Yasir Bin Tariq, 2018. "Outreach and Performance Analysis of Microfinance Banks in Pakistan," Business & Economic Review, Institute of Management Sciences, Peshawar, Pakistan, vol. 10(3), pages 21-40, September.

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