Impact Of Microfinance On Poverty Reduction And Welfare Of Rural Households: An Emperical Evidence From Pakistan And China

Microfinance has been widely adopted as a poverty reduction tool.Among the various countries,China has also adopted microcredit especially for rural poverty reduction and different rural microfinance banks are operated in the field.The present study assessed the determinants of rural households' microcredit accessibility in the Shaanxi province of China.For this purpose,primary data were collected through a pre-tested questionnaire through face to face interview from 389 household head and employed logistic regression to determine the factors affecting the microcredit accessibility among the rural households.The survey results revealed that sex,education,and income were the positive and significant determinants of rural household's microcredit accessibility,while age,occupation,household size,and distance to microfinance banks were the negative and significant determinants.The long distant banks,low levels of education,and low levels of household income were found as the major constraints in accessing the microcredit in the study area.The study suggested for flexible microfinance policies in terms of collateral and repayment to increase the microcredit accessibility to rural women,poor households,farming community,and large size households to effectively reduce rural poverty by increasing the investment opportunities.Poverty is global menace and Pakistan is no exception,about 22% of its population is living under the poverty line on the basis of head count ratio.Micro credit programme has emerged as a vital tools to address the issues in counties like Pakistan.It gives people a chance to earn livelihood,help them to live with self-esteem and reduce their financial exploitation.The study in hand analysed how microcredit helped in reducing the poverty in Pakistan.The secondary data based study was conducted to assess the role of micro-credit in the uplift of low income consumers.Multiple models was used in two phases first to check the micro-credit on the income of people and secondly to test out the impact of the income on the poverty status.The results of the first phase showed that the income is dependent on the micro-credit along with other variables and in the second phase it was found that income has negative impact on the poverty providing a clue that micro-credit is important tool for improving and increasing the living standard of the people.The analysed data revealed that the income,savings and consumption arrangements of low income people,and serious factors that affect the use of microcredit.The low loan people are targeted;whose are also low income people for household income and consumption smoothing.The study sample was consisted of lower income rural area of Yangling,belong from lower income groups of households and were tested by logistic regression model.The result showed that microcredit borrowers were using the loans for purposes that can be acknowledged as income and consumption smoothing,which is beyond the ideas and intended practice of microcredit.The outcomes suggest that the significances of using microcredit for income and consumption smoothing could be costly for households and the society at large.