THEORETICAL ANALYSIS OF MICROFINANCE ON POVERTY ALLEVIATION

The objective of this paper is to investigate theoretical background of microfinance and poverty alleviation. The article consist the two types of theories, which related to microfinance. First types of theories addresses the specific issues the poor have to face when seeking access to formal financial resources, due to the lack of collateral and second types of theories. The second set of theories are based on the impact of microfinance on small businesses, households and individuals. The first category of theories consist Theory relating to Emergence of Microfinance, Concept of Joint Liability Group in Microfinance. Theories of impact pathway of microfinance consist Theory on Shortcomings of Development Finance Strategies, Market and Welfare Theories, Poverty Lending Approach, Financial System Approach and5 Financial Integrated Approach

What Works Best for the Poor in Rural India

Financial sector development serves poor directly through poverty-lending approach or financial systems approach. Robinson (2001) questions the appropriateness of poverty-lending approach for the extremely poor and supports the financial systems approach for providing a poverty alleviation toolbox to serve the poor at various levels. The present study attempts to assess the effectiveness of the two lending approaches and comments on the appropriateness of the same for the poor and the poorest of the poor in rural India using state-wise annual data from 1999–2000 to 2011–2012. We conduct a panel data analysis for a sample of 15 major Indian states and provide an empirical evidence for the effect of various poverty alleviation tools on the poor and the poorest of the poor in rural India. The study partially supports the use of tools suggested by Robinson.

NGOs, Micro-finance and Poverty Alleviation: Experience of the Rural Poor in Pakistan

Non-governmental organisations (NGOs) continue to be the global ‘flavour of the month’ in international development. They are regarded as “outside” actors perceived to work in the interests of the poor, and in the absence of the state, many NGOs have taken on vital role in the provision of basic services to the poor. The institutional and political environment is attuned to privatisation in whatever form it takes. NGOs are another expression of this trend, but in the case of NGOs no real disillusionment phase has yet set in. But still NGOs remain the favoured vehicle for grass-roots involvement and community development in many countries. The present paper seeks to delineate the role of NGOs in micro finance and study their aggregate impact on poverty reduction in rural Pakistan as a result of micro finance efforts. The paper is organised in four sections. Section I commences with the concepts, promises and limitations of NGOs as a vehicle of micro finance. Section II summarises the record of performance of NGOs in Pakistan. In particular, the role, achievements and set-backs of two noted NGOs in Pakistan, Agha Khan Rural Support Programme (AKRSP) and National Rural Support Programme (NRSP). Which are studied by examining aggregate impact of these NGOs on poverty reduction as result of their micro finance efforts. Section III examines the poverty profile and presents summary of the role of NGOs in the context of poverty lending and, finally Section IV concludes the analysis and proposes some policy recommendations.