Microfinance for Poverty Reduction in Pakistan: A Sectoral Analysis

Abstract

The study analyzes the impact of microfinance provided by Khushhali Microfinance Bank Limited (KMBL) for poverty reduction in district Sargodha. It explores explicitly the sectors in which credit usage is more helpful for poverty alleviation. For this purpose, we collected the primary data of 300 households from KMBL. The findings revealed that microfinance played a vital role in poverty eradication. The binary logistic regression implied that males were more likely to be poor than female borrowers. There was a negative and statistically significant relationship between educational attainment of the respondent and poverty level of the household. The existence of the market and poverty level were negatively correlated. Most importantly, the trading and services sectors had a significant contribution to poverty reduction among all the sectors. Hence, there is a need to increase female participation in the credit program. Special attention should be given to the borrowers to utilize their loans in the trading and services sectors, which are more helpful in coming out of poverty.