Impact of Housing Microfinance on Socio-Economic Indicators: A Study of Prime Minister’s Low-Cost Housing Scheme in Pakistan

Abstract

The objective of this paper is to check the impact of dividend policy and firm Housing Microfinance / Low-Cost Housing Scheme has been promoted to fill the national housing demand/supply gap in Pakistan in recent years. Prime Minister’s Low-Cost Housing Scheme (PM-LCHS) was introduced with the aim of providing financial assistance to poor and deserving families enabling raise in their living standards. A total of Rs. 8.54 billion has been disbursed so far through Akhuwat Islamic Microfinance. The study aims to empirically test the impact of PM-LCHS loan utilization on beneficiaries’ welfare in terms of socio-economic indicators. This research also proposes to assess governance and administrative efficiency and design effectiveness of the initiative The total population of 17, 344 beneficiaries is sampled using Proportionate Stratified Sampling; Group 1 (stratum 1) constitutes beneficiaries who are in utilization phase and Group 2 (stratum 2) constitutes beneficiaries who are repaying the loan post 100% loan utilization. The proposed frameworks are tested using data collected from 463 beneficiaries. Key findings show that PM-LCHS utilization improved sense of security, societal standing and psychological conditions of respondents. Moreover, the loan utilization has enhanced multiple components of sanitation conditions and housing infrastructure; yet the repayment amounts causing no negative impact on their financial wellbeing. However, PM-LCHS utilization is not found to have any effect on beneficiaries’ health. Furthermore, Akhuwat has administered PM-LCHS efficiently and beneficiaries are satisfied from its governance. Thus, any other financial institution interested in offering such a HMF initiative must have appropriate human resource and skillset to reach the eligible clientele and address their financial requirements like AIM. Though, respondents are satisfied from the scheme as a whole, the study elucidates concerns about some design elements, namely financing limit, repayment period and number of disbursement instalments. These findings again have policy implications for the institutions seeking to enter the HMF market; incorporate these results to formulate the HMF/LCHS product that better suit the financing needs of low-earning people. The originality of this study is theorizing and empirically testing the effect of Housing Microfinance/ Low-Cost Housing Scheme and analyzing the linkages between PMLCHS loan utilization and beneficiaries’ living standards and welfare in Pakistani context.

Asset-Based Money Systems in a Global Context: Implications for Social Inclusion and Economic Development

“…Islamic asset-based financing can help strengthen partnerships, increase aid flow effectiveness and create equitable finance to deliver SDGs (OECD, 2020). The use of asset-based financial inclusion not only provides a platform that reduces riba but also helps in the redistribution of income (via microfinance (Ali & Nasir, 2023)and risk sharing), which has social gains (Mohieldin et al, 2011). It can further stabalize the financial system (Laldin & Djafri, 2021).…”