The Impact of Microfinance on Poverty Reduction and Women Empowerment

This paper is to examine the impact of microfinance on poverty reduction and women empowerment as perceived by microfinance institutions and experienced by aspiring women credit participant in Ethiopia. The study reviewed different literatures and broadly focused on social activities and economic empowerment of women beside household poverty reduction and economic development and the effect of household income, the objective of this study is to show how microfinance works, by using women participants for reducing poverty and how it affects the living standard (income, saving etc.) of the household poor people in Ethiopia, The microfinance institutions (MFIs) provide the opportunity for the people who are living under the poverty lines, the institution particularly encourage poor women households and the result will show that how poverty reduced by encouraging and providing access to finance poor household. Microfinance institutions are claimed to directly affect household income by encouraging productivity, increasing diversity of production and productivity, and maximizing the utilization of the available resources (Binswanger, 2007; Dejene, 2007; Sudan, 2007; Akintoye, 2008; Belwal et al., 2012; Fletschner & Kenney, 2014)