Impact of microfinance on poverty alleviation in SAARC countries
School of Business & Law, Edith Cowan University
School of Business and Law
Poverty remains a concern for many developing economies and microfinance (MF) has emerged as an effective tool for poverty alleviation. Studies on MF and its impact on poverty are mostly based on micro-level household data or entrepreneurial data. This paper examine the impact of microfinance on poverty and its dimensions at a macro level using a cross-country dataset of SAARC member countries from 2000 to 2015, available from the Microfinance Information Exchange (MIX) and World Bank poverty estimates. Fixed and random effect models are used to measure the impact of microfinance on income, education, health and living standards. The results show significant and negative associations between MF loans with the poverty headcount ratio, and poverty gap. We also find MF loans have a positive effect on three dimensions of poverty: education, health, and living standard.