Growth and Productivity Analysis of Micro Finance Sector: A Case Study of Pakistan

Abstract

This study reviews the growth strategies and their effect on the efficiency and productivity of the microfinance sector of Pakistan. The sector needs to have adopted intensive growth strategy instead of extensive strategies of wide expansion in term of physical infrastructure and human resources, which had increased the financial sustainability risks for the credit constrain institutions. The sixdimension model of outreach used in this study also shows that the sector does not achieve the targets set forth for these micro finance institutes with respect to its active borrowers’ outreach. The sector has mainly focused the big cities and urban areas whereas the poverty levels are higher in rural areas. The government has also shown its interest by launching two different types of loan schemes. Among the three different types of institution, the microfinance banks dominate the sector.