Role of Microfinance in Raising Living Standard: A Case Study of First Micro Finance Bank in Larkana

Abstract

Raising living standard of people in community always remains an important issue in any society. Microfinance has been considered as an effective tool to address this issue for centuries. Currently it has been operating in almost all the countries. This research study was conducted to explore the role of microfinance banks in raising the living standard of people in Larkana district. The target population included all the customers of First Microfinance Bank (FMB). The total number of the customers was 5000. The sample of 100 respondents was drawn through convenience sampling procedure. A structured questionnaire was made related to dependent (living standard) and independent variables (microfinance). The data was collected through survey by approaching the respondents in First Microfinance Bank. The regression method was used to find out the impact of microfinance on the living standard of the borrowers for this research study. Our proposed hypothesis was accepted that there is positive impact of microfinance on the living standard of the borrowers. But based on the detailed analysis, it has been found that the microfinance (size of loan) causes very small variation in the Living Standard of the borrowers. This demonstrated that there is huge impact of some other factors on the living standard of the borrowers, i.e. micro insurance, savings, other microfinance financial services etc. furthermore, it was observed that the loan size is not satisfactory. This was also the reason of such small impact of microfinance (size of loan) on living standard. It has been evident from the overall analysis that through the assistance microfinance activities poor can stand on his own, sustain, survive and improve their living standard.