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Microfinance and its role in household poverty reduction: findings from Pakistan

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  • Asad K. Ghalib
  • Issam Malki
  • Katsushi S. Imai

Abstract

Abstract This study examines whether household access to microfinance reduces poverty, and if so, to what extent and across which dimensions of wellbeing. The study draws on first-hand observations and empirical data gathered from interviews of 1,132 households across 11 districts in the rural areas of the province of Punjab in Pakistan. It employs a quasi-experimental research design and makes use of data collected by interviewing both borrower (treatment) and non-borrower (control) households. Sample selection biases are controlled by matching propensity scores. Findings reveal that although borrowers seem to fare better than non-borrowers across around 70 percent of the indicators, a majority of these are not statistically significant. This suggests that despite producing some degree of positive impact, microfinance institutions still have to make sustained efforts to bring about real difference to the livelihoods of the poor.

Suggested Citation

  • Asad K. Ghalib & Issam Malki & Katsushi S. Imai, 2012. "Microfinance and its role in household poverty reduction: findings from Pakistan," Global Development Institute Working Paper Series 17312, GDI, The University of Manchester.
  • Handle: RePEc:bwp:bwppap:17312
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    File URL: http://hummedia.manchester.ac.uk/institutes/gdi/publications/workingpapers/bwpi/bwpi-wp-17312.pdf
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    References listed on IDEAS

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    1. A. Smith, Jeffrey & E. Todd, Petra, 2005. "Does matching overcome LaLonde's critique of nonexperimental estimators?," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 305-353.
    2. Imai, Katsushi S. & Arun, Thankom & Annim, Samuel Kobina, 2010. "Microfinance and Household Poverty Reduction: New Evidence from India," World Development, Elsevier, vol. 38(12), pages 1760-1774, December.
    3. Karlan, Dean S. & Zinman, Jonathan, 2009. "Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila," CEPR Discussion Papers 7396, C.E.P.R. Discussion Papers.
    4. Demirgüç-Kunt, A. & Beck, T.H.L. & Honohan, P., 2008. "Finance for all? : Policies and pitfalls in expanding access," Other publications TiSEM aec73d3a-d6eb-457f-9182-3, Tilburg University, School of Economics and Management.
    5. Matthieu Chemin, 2008. "The Benefits and Costs of Microfinance: Evidence from Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 44(4), pages 463-484, April.
    6. Hossain, Mahabub, 1988. "Credit for alleviation of rural poverty: the Grameen Bank in Bangladesh," Research reports 65, International Food Policy Research Institute (IFPRI).
    7. Conning, Jonathan, 1999. "Outreach, sustainability and leverage in monitored and peer-monitored lending," Journal of Development Economics, Elsevier, vol. 60(1), pages 51-77, October.
    8. Dehejia, Rajeev, 2005. "Practical propensity score matching: a reply to Smith and Todd," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 355-364.
    9. repec:ags:stataj:116022 is not listed on IDEAS
    10. Becker, Sascha O. & Ichino, Andrea, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 0(Number 4), pages 1-20.
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    Cited by:

    1. Mazumder, Mohummed Shofi Ullah & Lu, Wencong, 2015. "What Impact Does Microfinance Have on Rural Livelihood? A Comparison of Governmental and Non-Governmental Microfinance Programs in Bangladesh," World Development, Elsevier, vol. 68(C), pages 336-354.

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