Exploring the Impact of Microfinance on Socio-Economic Characteristics of Borrowers in Khyber Pakhtunkhwa, Pakistan

Abstract

Microfinance facility in Pakistan is extended by microfinance institutions to the micro entrepreneurs including Khushali Bank who took initiative being founder institution in Pakistan. It is operating since 1983 and extended enormous financing through loans employing a collateral with a sound recovery rate. This study attempted to find the effect of microfinance on the socio-economic conditions of the borrowers in the province of Khyber Pakhtunkhwa. Based on data gathered from old and new borrowers, the study analyzed the effect of microfinance on welfare of the household of the borrowers’ households concerning the housing conditions, food security, children’s education, poverty status, monthly income, and expenditures before and after availing the loan using “with or without approach”. Likewise, a non-parametric method was also employed to check the difference between old and new borrowers regarding income, consumption expenditure, housing improvement, access to education, and access to medical facilities, poverty status. The study reported that Microfinance significantly improve the borrowers life and living conditions, furthermore, this impact was much greater for the old borrowers as compared to the new ones.