Title
The Impact of Microfinance and its Role in Easing Poverty of Rural Households: Estimations from Pakistan
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.
Keywords
Microfinance; poverty; impact assessment; propensity score matching; Pakistan
JEL Classification
C21, I32, O15, Q12
Inquiries
Brooks World Poverty Institute, University of Manchester
Issam MALKI
Department of Economics, University of Bath
Katsushi S. IMAI
School of Social Sciences, University of Manchester