Microfinance and poverty reduction: New evidence from Pakistan

Abstract

Microfinance is key to reducing poverty in Pakistan. While comprehensive finance is frequently considered as, it creates inclusive growth and poverty reduction in poor communities, and can be boosted by ease of finance. However, when the poor people are involved in the broader scale (different types of poverty level), can this microfinance work? We used an econometric model to test the symmetry approaches of the comprehensive financial organizations and the poor in poverty reduction activities to find the answers. Keeping this in view, we studied different determinants related borrowers for the poverty reduction with respect to access to Micro finance institutes (MFI) and productive loan. Despite some limitations, such as those arising from potential unobservable important determinants of access to MFIs, significant positive effect of MFI productive loans has been confirmed. The significance of “treatment effect” of coefficients has been verified by probit model. In addition, we found that loans for productive purposes were more important for poverty reduction by MFB (Microfinance banks) than MFI. However, in urban areas, simple access to MFIs has larger average poverty‐reducing effects than the access to loans from MFIs for productive purposes. This leads to exploring service delivery opportunities that provide an additional avenue to monitor the usage of loans to enhance the outreach. Therefore, the results showed by probit model that access to MFI was better in urban areas and male borrowers thus achieved more loan. Therefore, it is suggested that for the poverty reduction, there is a dire need to improve and localize the Microfinance institutions in rural areas as well as to promote group lending methodology to avoid risk of getting loans and increase the number of both male and female savers. Thus, the saving value will be increased and side by side interest rate will be significantly achieved. Hence, it is concluded that the goal of providing sustainable financial services implicitly implies that MFIs provide financial services to the poor, whenever they find it profitable to do so. The removal of subsidy and the absence of interest rate restrictions could make the market for the poor become even worse as the market occupiers may act in their own interest. The powerful push will be needed from national economic and social impacts for the increasing support for microfinance.

Employee state paranoia: linking abusive supervision with employee voice behavior

“…Microfinance banks in Pakistan have been characterized by financial assistance to a large number of poor customers (Iqbal et al , 2015), thus contributing to poverty reduction (Khan et al , 2020). For such high target requirements to meet, employees have to work for more than normal working hours.…”

Microfinance Services and Poverty Reduction in Sarawak, Malaysia

“…Since there are existing policies both at the state and national level, there is a need to recognise and popularise the best policies or programmes that can effectively reduce poverty in the state. There are arguments in the literature in the favour of microfinance services (Khan et al, 2020). Microfinance services are financial services that are offered to low-income individuals or groups or those with inadequate access to mainstream financial services.…”

“…Microfinance services include microcredit, microinsurance, savings and training. Microfinance has impacted positively on the lives of recipients, lift the capacity of poor households to better their economic situations (Khan et al, 2020). Hence, it is appropriate to consider the impact of microfinance services on poverty reduction in Sarawak.…”

“…However, according to our knowledge, there is no paper devoted to the nexus in Sarawak. The current papers have focussed on other regions (Khan et al, 2020). There are also few papers on Malaysia (Solarin et al, 2020).…”

Socioeconomic Development on Poverty Alleviation of Women Entrepreneurship

“…Microfinance is gaining importance to create jobs, provide income for the poor, and alleviate poverty. Many studies of microfinance look at different programs and institutions providing microfinance support (Khan et al, 2020;Mohamed & Fauziyyah, 2020;Sharma, Guptu, Sharma, & Sharma, 2021;Siti-Nabiha & Siti-Nazirah, 2021).…”