| Abstract: |
An attempt has been made to quantify the targeting of the microfinance and its
economic impact on the borrowers. The study has employed the Difference of the
Difference Approach to find the net effect of microfinance by employing data
collected by Pakistan Poverty Alleviation Fund. The study found that about 30
percent of the borrowers were poor, while 70 percent of the borrowers were
non-poor. The impact on the poverty status was found to be marginal. The
income of the poor borrowers hardly could grow by 2 percent during the study
period. However, the consumption of the poor borrowers increased by 10
percent, which indicates that poor primarily borrow for smoothing their
consumption. A significant net effect of microfinance on the consumption (6.71
percent) and income ( about 6 percent) of non-poor borrowers has been found.
Results show that poor nonborrowers were better off in terms of change in most
of their assets compared to the poor borrowers. However, the net effect of
microfinance on households durables of the non-poor borrowers was marginal’
while the net effect of microfinance on few household durable items like fan,
bicycle and sewing machine , of the poor borrowers was found to be positive.
Compared to the poor borrowers, the majority of the poor non-borrowers
reported no change in their livestock. Similarly, some poor borrowers reported
positive changes in their livestock as compared to poor non borrowers during
the study period, which shows positive net impact of microcredit on the
livestock of the poor borrowers. Expenditures on social and other
miscellaneous items were found to be very small. |