Effect of Microfinance on Women Empowerment: A Case Study of Pakistan

Abstract

Women empowerment is a pivotal issue of developing counties, particularly in Asia and Africa. Zero poverty and gender equality are the distinctive goals among SDGs of UN. Considering the empirically tested impact of microfinance on women empowerment in different regions of the world, this paper assesses the impact of microfinance on empowerment and poverty alleviation in women living in Pakistan. This impact has been analyzed comprehensively with better empirical methodology (Ordinary Least Square – OLS and Propensity Score Matching – PSM) and comparatively a larger cross-sectional dataset of 670 respondents. From the values of the responses, Multidimensional Poverty Index (MPI) has been developed to assess the Multidimensional poverty levels of the respondents. Results showed that exposure to microfinance has a positive impact on women empowerment, poverty alleviation, and social status of women by raising their income level. Therefore, it is concluded that microfinance and MFIs are considered to be an effective mechanism for attaining the SDGs in Pakistan.

Keywords: Sustainable Development Goals (SDGs), Microfinance, Poverty Alleviation, Women Empowerment, Propensity Score Matching (PSM), and Multidimensional Poverty Index (MPI)

JEL Classification: D13, G21, J16, O16