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Can Commercially-oriented Microfinance Help Meet the Millennium Development Goals? Evidence from Pakistan

  • Montgomery, Heather
  • Weiss, John

Summary The current emphasis in the microfinance industry is a shift from donor-funded to commercially sustainable operations. This article evaluates the impact of access to microloans from the Khushhali Bank--Pakistan's first and largest microfinance bank which operates on commercial principles. Using primary data from a detailed household survey of nearly 3,000 borrower and non-borrower households, a difference in difference approach is used to test for the impact of access to loans. Once the results are disaggregated between rural and urban areas there is a positive impact in rural areas on food expenditure and on some social indicators such as the health of children and female empowerment. These impacts are observed even in very poor households. These findings suggest that commercially-oriented microfinance and the millennium development goals are not incompatible, given a supportive environment.

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Article provided by Elsevier in its journal World Development.

Volume (Year): 39 (2011)
Issue (Month): 1 (January)
Pages: 87-109

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Handle: RePEc:eee:wdevel:v:39:y:2011:i:1:p:87-109
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  1. Coleman, Brett E., 2006. "Microfinance in Northeast Thailand: Who benefits and how much?," World Development, Elsevier, vol. 34(9), pages 1612-1638, September.
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  11. Weiss, John & Montgomery, Heather, 2004. "Great expectations: microfinance and poverty reduction in Asia and Latin America," MPRA Paper 33142, University Library of Munich, Germany.
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  13. Goetz, Anne Marie & Gupta, Rina Sen, 1996. "Who takes the credit? Gender, power, and control over loan use in rural credit programs in Bangladesh," World Development, Elsevier, vol. 24(1), pages 45-63, January.
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