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The Impact of Microfinance and its Role in Easing Poverty of Rural Households: Estimations from Pakistan

Author

Listed:
  • Asad K. Ghalib

    (Brooks World Poverty Institute, University of Manchester, UK)

  • Issam Malki

    (Departmaent of Economics, University of Bath, UK)

  • Katsushi S. Imai

    (Economics, School of Social Sciences, University of Manchester (UK) and RIEB, Kobe University (Japan))

Abstract

This study examines if household access to microfinance reduces poverty in Pakistan, and if so, to what extent and across which dimensions of well-being by taking account of the multi-dimensional aspect of poverty. The study draws on first-hand observations and empirical data gathered through the interviews of 1,132 households across eleven districts in the rural areas of the province of Punjab in Pakistan. We employ a quasi-experimental research design and make use of the data collected by interviewing both borrower (treatment) and non-borrower (control) households and control for sample selection biases by using propensity score matching. It has been confirmed that microfinance programmes had a positive impact on the welfare of participating households, that is, the poverty reducing-effects were observed and statistically significant on a number of indicators, including expenditure on healthcare or clothing, monthly household income, and certain dwelling characteristics, such as water supply and quality of roofing and walls.

Suggested Citation

  • Asad K. Ghalib & Issam Malki & Katsushi S. Imai, 2011. "The Impact of Microfinance and its Role in Easing Poverty of Rural Households: Estimations from Pakistan," Discussion Paper Series DP2011-28, Research Institute for Economics & Business Administration, Kobe University.
    • Handle: RePEc:kob:dpaper:dp2011-28
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    File URL: https://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/DP2011-28.pdf
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    References listed on IDEAS

    as
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    Cited by:

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    2. Farah Said, 2016. "Access to Finance and Agency: An Overview of the Constraints to Female-Run Enterprises," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(Special E), pages 331-349, September.
    3. Mathilde Maîtrot & Miguel Niño-Zarazúa, 2017. "Poverty and wellbeing impacts of microfinance: What do we know?," WIDER Working Paper Series 190, World Institute for Development Economic Research (UNU-WIDER).
    4. Paramasivam Ramasamy & Umanath Malaiarasan, 2023. "Agricultural credit in India: determinants and effects," Indian Economic Review, Springer, vol. 58(1), pages 169-195, June.
    5. Nordjo, R. & Adjasi, C., 2018. "The Impact of Finance on Welfare of Smallholder Farm Household in Ghana," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277142, International Association of Agricultural Economists.
    6. Abdo Ali Homaid & Ali Yusob Md Zain & Yahya Ali Al-Matari & Mohd Sobri Minai & Fais Bin Ahmad, 2017. "The Role of Customer-focused Strategies to Improve Islamic Microfinance Institutions Performance: Empirical Evidence and Lessons from Yemen," International Review of Management and Marketing, Econjournals, vol. 7(1), pages 291-299.
    7. Koffi Sodokin, 2022. "Access to Microfinance Institutions and Official Banks and the Impact on Small Business in Togo," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 14(1), pages 1-46, January.
    8. Mathilde Maîtrot & Miguel Niño-Zarazúa, 2017. "Poverty and wellbeing impacts of microfinance: What do we know?," WIDER Working Paper Series wp-2017-190, World Institute for Development Economic Research (UNU-WIDER).
    9. Kifayat Ullah & Abdul Qayyum Mohsin & Abdul Saboor & Saranjam Baig, 2020. "Financial Inclusion, Socioeconomic Disaster Risks and Sustainable Mountain Development: Empirical Evidence from the Karakoram Valleys of Pakistan," Sustainability, MDPI, vol. 12(22), pages 1-26, November.

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    More about this item

    Keywords

    Microfinance; Poverty; Impact assessment; Propensity score matching; Pakistan;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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