Microfinance Facility for Rural Women Entrepreneurs in Pakistan: An Empirical Analysis

Touseef Ahmed Khan, Fahem Ahmed Khan, Qristin Violinda, Ilyas Aasir and Sun Jian
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Touseef Ahmed Khan: College of Economics and Management, Huazhong Agricultural University, No. 1, Shizishan Street, Hongshan District, Wuhan 430070, China
Fahem Ahmed Khan: College of Animal science, Huazhong Agricultural University, No. 1, Shizishan Street, Hongshan District, Wuhan 430070, China
Qristin Violinda: Faculty of Economic & Business, Universitas PGRI Semarang, Jawa Tengah 50232, Indonesia
Ilyas Aasir: College of Economics and Management, Huazhong Agricultural University, No. 1, Shizishan Street, Hongshan District, Wuhan 430070, China
Sun Jian: College of Economics and Management, Huazhong Agricultural University, No. 1, Shizishan Street, Hongshan District, Wuhan 430070, China

Agriculture, 2020, vol. 10, issue 3, 1-17

Abstract: Since 1990, microfinance has gained universal recognition as an essential and useful tool to address the economically productive poor and provide them with a way to come out of the vicious circle of poverty, by delivering loans and credit on flexible terms in contrast to commercial banks. Many studies from different parts of the world have shown significant economic and social uplift of recipients (both men and women) of microfinance programs. However, in recent years, some studies argue against the positive influence of microfinance and stresses that microfinance is commercialized, and it has become more of a profit generation activity than uplifting of the economically productive poor, which is one of many core objective of microfinance organizations. Many empirical studies have been done to know the effects of microfinance on the welfare of households. They are well documented, e.g., in Bangladesh and India, but only a few studies assess the microfinance effect on rural female entrepreneurs of Pakistan. The present study was carried out to empirically analyze the outcome of microfinance on Pakistan’s female entrepreneurs. Women’s empowerment is gauged using income and consumption as welfare indicators. The difference in difference method is applied to investigate the effects of microfinance on its recipients, which is considered a useful tool to tackle the selection bias problem. Our study result shows that microfinance programs that target women not just only increase income and consumption of female borrowers, making them financially stable, but in fact, many local stakeholders also get benefited from it, and in turn, it creates opportunities for the whole local community. However, our results also show that it does not reach to the poorest of poor women (extremely poor) and thus does not serve the purpose of many of its core objectives, i.e., poverty reduction of extremely poor and henceforth should not be relied upon in this perspective.

Keywords: microfinance; female rural entrepreneurs; household welfare; women’s empowerment; difference-in-difference; rural Pakistan (search for similar items in EconPapers)
JEL-codes: Q1 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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