Chapter-1

Background of the study

Assessment of the impact of microfinance on poverty alleviation in Abbottabad is the core motive of this
research. This research is based on a survey in which the primary data is be collected through structured
questionnaire that comprises of various aspects of microfinance and poverty reduction.

Microfinance being multidimensional in nature is considered to be one of the most vital programs to achieve
poverty reduction in every part of the world. The main objective of this research is to look at the impact of
small finances on poverty alleviation. The results would give an insight to how microfinance contributes to
economic condition reduction notably for feminine contributors and to overall economic condition reduction
at the village level in Abbottabad region.

Microfinance for women empowerment program (MFWE) is one of the specialized program of Sungi
Development Foundation Abbottabad, which is in one on the prosperous nonprofit, non-government
organization working to uplift the lives of marginalized communities since 1989. Through this program
different loan products are offered to the poor communities in working areas specially women with an aim to
engage them in economic activities. In this study microfinance and poverty reduction is considered as
independent and dependent variable respectively. Women of the SDF working areas where MFWE program
is operational in district Abbottabad is considered as population of this study. For this purpose both primary
and secondary data will be utilized to find out the results. The primary information will be gathered through
the questionnaire. Secondary data including research papers, reports, bulletins etc. would also be used to
gather data. The simple random method will be utilized to gather the data from urban and rural areas of
District Abbottabad. Descriptive statistics, Pearson correlation, and regression analysis will be used for data
analysis through SPSS 21.0.

The concept of Microfinance is not new. Back in 1978 the Nobel Prize winner Professor Muhammad Yunus
was the one who set up a bank as an experiment in Bangladesh named Grameen Bank. The traditional
microfinance activities can be traced back to 1963 when first cooperative savings and loans institution
(Credit Union) was created in Africa. Since past three decades, microfinance has proven its value in many
countries as a powerful weapon against hunger and hunger (Morduch 2002). Microfinancing could change
lives of people for better, specially the lives of those who need it most’’ UN secretary General Kofi A.
Annan (Latifee, 2006)”. Poverty alleviation has taken utmost priority since the 1990s at both national and
international levels.
Microfinance has grabbed the attention of many governments, NGOs, donors as an effective tool for poverty
alleviation since its upsurge. (Georgia summit June2004). In Pakistan, Sungi Development Foundation has
made credible and widely recognized efforts for social change and development of vulnerable communities
since its establishment in 1989. Sungi works for bringing positive change in society by mobilizing deprived
and marginalized communities. One of the Sungi Foundation program is Microfinance for women
Empowerment that would be mainly focused in this research.

In year 2011, 12.4% of Pakistanis were living below the definition of poverty. Statistics are different because
of different definitions of poverty. According World Bank’s report of 2014, poverty in Pakistan reduced from
64.3% to 29.5% from 2002 till 2014 (WEB).

Purpose of Study/Justification
The utmost purpose of this research is to analyse the effect of microfinancing on poverty alleviation of that
community which is beneficiary of MFWE program of Sungi Development Foundation. This research would
help to sort out the shortcomings and loop holes in the mentioned program and would help to bring the best
possible solution to utilize the funds in the most efficient and effective possible way.
Statement of the Problem
According to the latest evidences 29.86 billion people in Pakistan are living below the poverty line. Out of
which around 20 million are living in the rural areas while 9.86 live in urban areas. Poverty line is the ability
to afford the intake of minimum 2550 calories/person/day. Inspite of the high GNP growth rate in the recent
past, it is still necessary to have a direct attack on poverty. This is necessary because of the intensified
economic inequality resulted due to increased reliance in business market. Majority development schemes
resulted in poverty reproduction in the past and they also brought a rapid increase in budget deficit, loan
dependence and also a great decrease of the natural resources. These trends have lead to a horizontal and
vertical polarization of community. Thus there is a great need to assess whether the currently functional
poverty alleviation schemes are helping to provide basic needs and community self-reliance through human
resource development and income generation activities or not.
 Objectives
 The primary objective of this research is to evaluate the effect of Microfinance in reducing poverty
specifically in union councils of Abbottabad region
 To assess the financial condition of the local population and their sources of income

 To investigate the economic activities being carried out by local women

 To study the effect of MFI schemes on women empowerment and their upbringing

Study Area
Those Union councils of district Abbottabad are the targeted areas of study in this research where SDF’s
Microfinance for Women Empowerment (MFWE) program is operational.
Chapter -2

Literature Review

Conceptual Issues

According to Otero 1989a, Microfinancing means provision of financial services to the people with very low
income and those which are self-employed but are very poor. According to Ledgerwood 1999, the financial
services could include payment and insurance services, credit and savings etc. Jegede et. al, (2011)
concluded that Microfinance pertains to the lending small amount of capital to poor entrepreneurs, so that a
mechanism could be created to alleviate poverty by providing the destitutes with such resources that are
available to the rich, alert at a small scale.

Microfinance and microcredit

It is very important to understand the concept of Microcredit and microfinance. According to Singh, (1990)
microcredit means small loans while on the other hand microfinance is is the term used for the loans
supplemented through insurance and savings etc. Microcredit is actually a component of microfinance and
includes provision of credit to the needy and poor people. Microfinance also involves additional non-credit
financial services like, insurance, savings and payment services (Okiocredit, 2005).

The concept of poverty

There are different views about what is poverty. Ted K. Bradshaw (August 2005) states that it is the lack of
food, medicines, shelter and other basic needs. Based on past experiences and social setup the basic needs are
different (Sen, 1999). According to Encarta Encyclopaedia, poverty is extreme non availability of sufficient
resources and income and lack of basic human needs such as adequate and nutritious food, housing, clean
water, health services and clothing (Encarta Encyclopedia2009). According to the report of United Nations,
(1998), poverty refers to inadequacy of such resources and choices that makes people enjoy better living
conditions. According to Professor Mohammed Yunus (1999) poverty is the denial of such human rights that
are related to the availability of basic needs.

If per day earning of a person is less than 2USD then the person is considered poor or if the person is
unable to earn such an amount of money that is sufficient to provide him healthy food, then he is said to be
poor (Baar, 2005).
Because of the rapid increase of inflation in Pakistan, poverty level has increase from 23.9% to 37.5%.
More than 60 million people in Pakistan are unable to provide food to their children and are unable to
manage their daily needs (Planning Commission, 2009).
In Pakistan, more than 20.5% people so poor that they do not have even daily food, clean water and health
and education facilities (Haq, 2008).

Importance of MFIs

Various third world countries including Pakistan have shown great interest in the establishment of MFIs
because of their in the provision of financial services like micro credits, micro savings, micro insurance and
other microfinance services to that portion of the population which is neglected by the traditional banking
system (Marconi and Mosley, 2006). Most small scale entrepreneurs in developing countries operate on such
informal markets whose financial services are different from the usual commercial bank lending. In terms of
outreach, MFIs are capable of assessing the rural areas and provide their services to the indigenous poor
communities.

Microfinance is considered to be the only solution for ending Indian poverty. Most of the people in India live
far below the line of poverty. There is an increasing demand of microfinancing in India. The current
outstanding balance to fulfill this demand is 1600 Crores, while the required amount is 45000 crores (Kumar
et al, 2010).

Microfinancing has been proven successful in reducing poverty. The next milestone achieved by the
Microfinance Institutions ( MFIs) is financial liberation. This is creating a very positive impact of the life of
poor (Adeola, 2000).

There is a great demand of Microfinancing in developing countries because of the increasing poverty.
Therefore, there is a need to extend this practice throughout the world. The microfinancing industry must
target the fulfilment of basic human needs and they must be able to compete even various banks (Bhutt et al
(2001).

Many poor people in underdeveloped countries do not have access to complete services of Microfinance
Institutions (MFIs). The reason is limited access and insufficient finances. These poor people are also unable
to get access to medication and education for their children. As a result of that poor people would always
remain poor.
An under-developed or developing country is the one where majority of the people live below the poverty
line or they are unable to get basic needs of life like food, water, health, education etc. ( Sirajul, 2007).
According to Adewole, a third world country is the one where the income of people is too less to make
them able to afford food, education, proper sanitation and health facilities (Adewole, 2008).
One of the greatest hurdles in the way of social and economic development is poverty. Because of poverty,
the achievement of economic objectives is not possible. Many illegal social activities also arise as a result
of poor social growth. Many policies and strategies were made for the world after second world war but
due to an increasing poverty, these policies were never able to achieve their objectives. (Yunus, 2003).

If the incomes of poor people are associated with microfinancing schemes then it could be a solution for
ending poverty. There is a need for reviewing all the existing strategies and policies of Microfinancing to
bring a positive impact on income level and poverty of poor people (Robinson, 2001).

Microfinancing institutions and the services they offer could be of great help in increasing stability, growth
and survival of poor communities. Hulme and Mosley conducted a research on this and proved the same by
collecting data from Bangladesh, Indonesia, Sri Lanka (Hulme & Mosley, 1996).

Effect of Microfinance on Living Standards

In Ethiopia and Bangladesh, Microfinancing has greatly helped people to improve their living standards.
The main source of earning in these countries is agriculture but the people are unable to get sufficient
production because of non-availability of proper pesticides, machinery and access to modern agricultural
practices. There is a need of providing immediate micro-credit facility so that people could get rid of
these problems. Thus in these countries, microfinancing industry should mainly focus in developing
agriculture sector (Tenaw & Islam, 2009).

Although there are many powerful tools available, but Microfinancing is considered to be the only
successful solution to provide all the basic needs to the poor people (Jonathan & Mordch, 1998).
Investment through microfinancing is directly proportional to oncome. But poor people are unable to
invest because of unavailability of financial resources. Hence poor remains poor and have no capital to
start any business through microfinancing schemes (Wood & Sharif, 1997).

Khushali Bank of Pakistan is also providing financial services and microcredit schemes and these
schemes are successfully influencing poor people in improving their health, food, education and other
basic living needs across Pakistan. Even the people living below poverty line also take advantage from
these schemes (Montgomery, 2005).
Alongside other basic needs of human life, access to technology is also a prime need for poor people too.
But because of the high interest rates on microcredit schemes makes it impossible for poor to access these
facilities (Muhammad, 2010).
If income of people is low it effects overall economic development of that country. On the other hand, if
income of people is high then it causes many positive effects on the economy of country. If income is
high then people could afford all the basic needs of life like food, water, health facilities etc. easily and
they live a better quality life. And this situation further improves because of Microfinancing schemes
(Bentu, 2008).

Relationship between Self-Employment & Microfinance

The only possible way to reduce poverty is microfinancing because it creates self-employment
opportunities for poor people. Thus poor people become empowered and they establish their own
enterprises. In India more than 24 crore people are living below the poverty line and these unbanked
people have no hope except for microfinancing schemes (Shastri, 2009).
The microfinancing credit facility increases the income. It has become a new mean for starting a new
business or extending the existing one. Its schemes are sources of productive works and income
generating activities (Khandker & Shahid, 2001).
Reducing poverty by microfinancing also depends upon the individual availing the facility and how
effectively he utilizes that facility. If misused, microfinancing would not be fruitful. Also if the schemes
are adopted by middle or upper class individuals then its sole purpose would not be justified because
these schemes are specifically targeted for people living below poverty line. These schemes are designed
keeping in mind the basic needs of poor people. And if properly utilized, these schemes can contribute up
to 75% in improving a nations economy (Rena et al, 2006).

Ahmed and Naveed conducted a research in District Rahim Yar Khan Pakistan, to check the effectiveness
of Microcredit schemes of Khushali Bank in reducing poverty. The variables they used were living
standards of poor, agricultural expenses, agricultural savings and production level. They observed a very
positive impact of these schemes in increasing agricultural production and also in improving living
standards of the area (Ahmad & Naveed, 2004).
Microfinancing and small loan schemes offered for fisheries, live-stock and cotton production etc. greatly
help to improve the living standards. Sometimes unavailability of financial means surpasses the creativity
and abilities of poor people, and the same could be taken advantage of, by means of such schemes. Thus
the unused skills could be fully utilized and bring fruitful outcomes (Barnes et al, 2001).
Microfinancing increases per capital income by development of new business as well as stabilizing
existing new business. Per capital income of those people taking advantage of microcredit schemes is
more than those who are non-borrowers (Kamal, 1996).

Microfinancing schemes are only designed for such poor people who do not have access to formal credit
schemes due to unavailability of sources. In Pakistan around 90% business firms are using microfinancing
facilities to fulfill the economic needs of their business. These schemes also help them to extend their
business (Ghalib, 2007).

Microfinance and Poverty

The growing profit of many Government banks and NGOs have also made the commercial and
conventional banks to take interest in microfinancing. One of such microfinance banks is Khushali Bank
in Pakistan. Keeping in view the growing popularity and success of microfinancing, many NGOs have
totally transferred their activities towards micro finance schemes (Fernando, 2004).
Because of the increased agricultural production after microfinancing schemes, the gross GDP of the
overall country boosts really fast (Waqar et al, 2008).
Microfinancing is not only been utilized by male but also greatly by female members of a society. Since
women play a major role in the family so in Pakistan women are also playing a great role in extension
and stability of small business enterprises which are run under the microfinancing schemes (Muhammad,
2010).
Microfinancing has been proved to be a great blessing for poor people of Pakistan who had no means to
earn for a better life. Multiple rural support programs are running across Pakistan to alleviate poverty
among people. These organizations include Agha Khan Rural Support Program (AKRSP), National Rural
Support Program (NRSP), Punjab Rural Support Program (PRSP), Sarhad Rural Support Program
(SRSP) and various NGOs like Sungi Development Foundation. But majority of these schemes have not
achieved their complete objectives because of the very high cost of the lending worthiness. (Henry,
2004).
Currently the effectiveness of the microfinancing schemes is measured by measuring their financial
stability. There is a big relationship between financial stability and the cost of microfinancing
opportunities. And this cost of microfinancing opportunities is high as long as there is shortage of
microfinancing industry (Ledgerwood, 1998).
In Pakistan it is very difficult for poor people to start their new business or enterprise due to the small
amount of microcredit offered through microfinancing schemes. Thus the poor people remain under the
same poverty condition. But in case of those poor people who already own a business then such small
loans can help to uplift and improve the condition of their business (Zaman & Hassan, 1999).
Another important factors that prevents poor people from getting full advantage of microfinancing
schemes is high interest rate and service charges. The reason could be that banks have to send their
representatives at the door step of poor people. And such arrangements involve huge costs so the cost is
accommodated in the form of high service charges and high interests on small loans (Brand & Gerschick,
2001).
Remenyi found a very encouraging relationship between the income level and microfinancing. When
microfinancing is large then it increases the income level to a greater extent and vice vers (Remenyi et al,
2000).
Since early 70’s, Microfinancing (MF) has gained huge success by reaching millions of needy people
around the underdeveloped and developing world with MFIs having multiple branches spread around the
whole world ( Mohammad Khan and Rahaman, 2007). The huge exponential growth of MFI is not only
because of a single market force but it involves the hard work and devotion of multiple persons and
organizations (Mohammad Khan and Rahaman, 2007). Pitt and Khandker (1996, 1998) estimated the
increase in household income to be 18 Bangladeshi taka against every hundred takas given to women
 under MF. Hulme and Mosley (1996, p.109) suggested that properly designed schemes could be very
helpful in ending poverty by improving incomes of poor people. According to them the credit schemes
benefit middle class and upper poor class because impact of a loan is related to the level of income (1996,
pp109- 112). According to Johnson and Rogaly (1997, p.122) NGOs must assess the impact of their
schemes on the livelihood of their users for poverty alleviation. According to their argument the NGOs
should go far beyond just analysis of quantitative data that deals with number of people and sizes of loans,
to understand about how their projects impact the livelihoods of their clients. Aghion and Morduch
(2005), observed that microfinance could not be considered a magic that could reduce poverty
immediately, and it should not be expected to be equally beneficial for everyone everywhere but there is
still possibility of good welfare impact.

Definition of Terms

Alleviation - when a painful situation has been made less painful, less severe and less serious.

Cooperative - Association of persons who voluntarily work together so that they can support each other and
can promote their economic interest.

Impact - the influence or outcome, result or consequence of something certainly new on a situation or
phenomenon.

Microcredit - small amount of loans provided by local financial systems like MFI, informal financial system
to the poor and poorest.

Microfinance - supply of financial services to people (especially the poor) excluded from the traditional
banking system (commercial bank and investment bank).

Micro saving- small amount of money deposited by individual in local financial systems which attract
interest and can be withdrawn at short notice.

Poverty - a situation in which someone/people do not have enough money to pay for their basic necessities
Chapter-3 Methodology

In general the women of poor communities of Abbottabad district are engaged in the different earning jobs
like stitching, serving as cook or maid at others houses, running small shops and few in far-away union
councils also have pet animals and they sell their milk and some rely on agriculture. These poor people are
sometimes unaware of the bank loan schemes and sometimes they hesitate to enter large banks. They are
mostly not able to get loan forms or read and understand the forms and their requirements. Therefore,
microfinancing schemes are the only option left, because these schemes approach these poor people at their
door steps and make it easy for them to avail loans. And these loans are small in amount so it is easy for poor
people to avail them.

Theoretical Framework of the research

The independent variable of this research is microfinancing. It has got two determinants, first loan cycle and
higher loan cycle. The beneficiaries who would take benefit from first loan cycle are control group while
those taking benefit of higher loan cycle are considered as treatment group. Women empowerment has
further got three sub determinants which include social, psychological and economic empowerment. All of
these terminologies are explained as under

Loan cycle

It refers to the duration between loan distribution and its repayment. This time is usually one year, and after
successful completion of this loan cycle the higher cycles start (Rahul Nilakantanet al., 2013).

First Loan Cycle

This is the first year of loan distribution and is the earliest stage of the whole cycle (SDF, 2008).

Higher Loan cycle

Higher loan cycles start after the successful completion of the first year of loan distribution. In this cycle
higher amount of loan is distributed and the time of repayment could be one year or more depending upon
the loan category.
Women Empowerment
It refers to the phenomenon that makes women able to be self-sufficient in managing their life choices
and take advantage of all the available resources to become financially strong (Moser, 1989).

Economic empowerment
If women have control over financial resources then they are called financially or economically
empowered. It makes women able to manage her domestic and social responsibilities with a greater
confidence. The economic empowerment of women is indicated by loan decisions that how freely they
can make choice of availing the loan (Weber & Adnan, 2014), and on their freedom to utilize the loan
availed.

Social Empowerment of women

It refers to the freedom of women in a society to make their choices and decisions, their role in
households and in society they live in, and their ability to avail loans through microcredit schemes
Kabeer, 1999). The social empowerment of women is indicated by their decision making freedom at
home (Weber & Adnan, 2014), their ability to assess the information about their basic rights (Malhotra,
2002), their access to education (Kabeer,1999), and the value of their decisions within family (Malhotra,
2002).

Technological Empowerment
It refers to the freedom of women to access the latest technology like mobile, internet, laptop etc.

Freedom for mobility

It means how freely women can move around the society , ti the shopping centers and business centers
for various households (Malhotra, 2002).

Psychological empowerment
It refers to the value of females and their decisions within a family and within society (Malhotra and
Schuler, 2005).
 Self-esteem and efficacy
These terms show self-confidence and self-esteem of females that how they value their role in society. It
is very important for them to know their importance that they too are very important pillers of a society
(Kato & Kratzer, 2013). Women must be confident about the skills they know. They could be
communications skills, business skills, management skills etc.

Hypothesis

This research is based on the following hypothesis

Microfinance loan cycles have positive impacts on overall empowerment of women, including social,
economic and psychological empowerment.

Method of data collection

Data for this research is collected through two different means; primary and secondary. The primary data
source includes questionnaires. The questionnaire relies on observation and interviews etc. The secondary
data for this research is collected from secondary sources, such as press releases, company’s reports, and
financial statement.

Following procedures and techniques including; Population, sample size, data collection instrument and
data analysis are used to conduct this study.

Population

Data is collected from women beneficiaries of 3 working union councils of District Abottabad. The total
active beneficiaries reported in year 2016-17 (of above mentioned Union Councils) from 1st Mar-2016 to
31 Mar-2017 are 900 therefore the population for this study are 900 women active beneficiaries (SDF,
2016-17).

Demographic profile of the respondents

For this research 150 respondents were selected who are taking advantage of microfinancing schemes of
Sungi Development Foundation in District Abbottabad. The demographic details are as under

Profile No. of Respondents Mean Standard Deviation

Married with children 75 2.67 0.97182
Unmarried 25 2.36 1.034209
Widows 30 1.78 0.43213
Married without 20 1.35 0.47091
children

It is clear from the above table that majority of the women taking advantage of the microfinancing
schemes are married women with children. They need such small loans to run businesses so that they can
help their children lead a better life.

Sampling technique and sampling size

The data would be collected by using simple random sampling technique. The sample size of this study
will be decided later & women are active beneficiaries. The sample size is calculated through the
following formula.

Formula for calculating sample size

Z 2 * (p) * (1-p)
ss =
c2

In this formula

Z value represents confidence level (e.g. 1.96 for 95% confidence level)
p is expressed in the form of decimals (0.5 in this case) and represents %age of picking a choice
c is confidence interval and is expressed as decimal (e.g .05)

Data collection Instrument

Data will be collected through self-administrated structured questionnaire on a 5 point Likert scale. The
scale is ranged from 1 (strongly disagree) to 5 (strongly agree).
Questionnaire design

The questionnaire consists of different questions to investigate the background of participants. The
questions were about age, number of family members, education, living styles and standards, income, and
saving etc. The questionnaire contains MCQs. The participants are asked to pick the one that matches with
their answer. Some questions were to be answered either as Yes or No.

Data Analysis

The data collected through survey was analyzed by using SPSS software SPSS20. The frequency
distribution, graphical details and percentage was calculated through descriptive statistics. Relationship
between various variables was calculated through Pearson correlation. In order to find out the effects of
microloans cycles on women empowerment, one way ANOVA was performed. Economic, social,
psychological empowerment was checked through ANOVA.

Ethical Values of society

Keeping in view the social values and research ethics, prior permission was taken from the respondents
about their participation in filling out the questionnaire. They were properly explained about every part of
the questionnaire and they were made sure that their names would remain confidential. They were given
enough time to properly understand the questionnaire and work on it with a relax mind.
Chapter 4
Results and Discussion

4.1 Introduction

In order to analyse the data collected through questionnaire, SPSS20 was used. The chapter consists of
two parts. First part of the chapter is about descriptive statistics and it is carried out to get graphs and
tables and to find frequency distribution. The second half of the chapter gives us the correlation between
dependent and independent variables. In order to check the hypothesis, one way ANOVA has been
carried out.
4.2 Demgraphics of the sample
In order to find the demographic features of the data, descriptive analysis was conducted. Percentage and
pie charts were used for this purpose. Table 4.2.1 represents different age groups of the respondents.
Total 150 females were selected as respondents and among these 30 females were from the age group 17
to 28 years, 80 were from age group 28 to 36 years, 40 were between the age 36 to 50 years. The
percentage of each group is represented by the given pie chart.

Distribution on the basis of marital status

Table 4.2.2 shows the frequency distribution on the basis of marital status of the respondents. Among all
the participants, 75 females were married and had children, 25 were unmarried, 20 were married but had
no children and 30 were widows.

Profile No. of Respondents

Married with children 75
Unmarried 25
Widows 30
Married without 20
children
 13%

Married with children

20% Unmarried
50%
Widows
Married without children

17%

Distribution on the basis of literacy level

The respondents were also distributed on the basis of their literacy rate. Among 150 respondents, almost
48% were illiterate and 52 percent were literate. The percentages of education are represented through
following pie chart shown in Fig..

literate
48%
iliterate
52%

The education level of all the respondents is represented through the following pie chart. Around 72
women were totally illiterate. Around 25 had only religious education, 15 were educated only up to
primary level, 15 had education between primary and matriculation, 18 were educated up to college level
while around 5 were university graduates.
The percentages of all of these women are shown in firgue……. Shown below

graduates, 5

religious
college, 18 education, 25

matric, 15
primary, 15

Loan cycles obtained

The details of all the loan cycles obtained by all the respondents are shown in the table below. Among all
the respondents, around 60 belonged to first loan cycle because they were the one who obtained the loan
for the first time. Around 30 respondents were in second loan cycle, 40 were in 3rd loan cycle, and 20
were in 4ht and higher loan cycles. The percentages of all these respondents in each loan cycle are shown
in the figure……
S.No. Loan Cycle No. of respondents
1 First 60
2 Second 30
3 3rd 40
4 Fourth and higher 20
 Fourth and
higher, 20

First, 60

3rd, 40

Second, 30

Coefficient of reliability
The coefficient of reliability was calculated by using Cronbach’s Alpha SPSS20. This was calculated to
find the positive correlation among various questions asked. The table shown below shows the
Cronbach’s alpha and reliability statistics of all the respondents. These analysis show a very positive
relationship between all the variables including women social, psychological, and economic
empowerment and microfinance loans.

ANOVA analysis (one way)

One way ANOVA analysis was conducted in order to find the comparison between the mean values of
women social, economic, psychological empowerment and loan cycles.
The dependent variables in this analysis are women social empowerment, women economic
empowerment and women psychological empowerment. Loan cycles including first, second, third, fourth
and above, are considered as independent variables. The loan cycles are represented by LC and number
of respondents is represented by N. According to the results given in table below, women social,
economic and psychological empowerment has increased at every loan cycle thus loan cycles has very
positive impact on women over all empowerment.
Dependent variables Loan cycle (LC) No. of respondents (N) Mean
Women social 1 60 3.5223
empowerment 2 30 3.5921
3 40 4.2134
4 and above 20 4.3455
Women economic 1 60 3.7132
empowerment 2 30 4.1287
3 40 4.2623
4 and above 20 4.4412
Women psychological 1 60 3.6919
empowerment 2 30 4.3128
3 40 4.7734
4 and above 20 5.2245

The above table…. Shows the dependent variables which are women social empowerment, women
economic empowerment, women psychological empowerment and independent variables which are loan
cycles. The number of respondents in the first loan cycle is 60, the number of respondents in second loan
cycle is 30, the number of respondents in 3rd loan cycle is 40 while there are 20 respondents in 4th and
higher loan cycles. The mean value of women social empowerment in the first loan cycle is 3.52, and the
mean value of women social empowerment is 3.59 in the second loan cycle, the mean value of women
social empowerment is 4.21 while the mean value for 4th and higher loan cycles is 4.34. This mean value
shows an increasing trend as we move from lower to higher loan cycles. It means that there is a positive
impact of microfinancing schemes on women social empowerment.
The mean value of women economic empowerment is 3.71 in the first loan cycle, the mean value of
women economic empowerment is 4.12 in the second loan cycle, the value of women economic
empowerment is 4.26 in the third loan cycle while this value is 4.44 in 4th and higher loan cycles. The
mean value of women economic empowerment shows an increasing trend as we go from lower to higher
loan cycles which shows a very positive impact of microfinance schemes on women economic
empowerment.
The mean value of women psychological empowerment is 3.69 in the first loan cycle, the mean value of
women psychological empowerment is 4.31 in the second loan cycle, the value of women psychological
empowerment is 4.77 in the third loan cycle while this value is 5.22 in 4th and higher loan cycles. The
mean value of women psychological empowerment shows an increasing trend as we go from lower to
higher loan cycle which shows a very positive impact of microfinance schemes on women psychological
empowerment.
Chapter-5
Conclusions and Recommendations
APPENDIX A: INDIVIDUAL SURVEY

Section 1: Background of Respondents

1. Date of Interview________________________________
2. District________________________________
3. Group Name________________________________

Section 2: Microcredit Information

4. How long have you been in the AIM scheme?

a) Less than one year

b) 1-2 years
c) 2-3 years
d) 3-4 years
e) 4-5 years

5. How many cycles of the AIM microcredit have you completed? ___

Section 3: Demographic Information

6. How old are you? ___________________
a) Below 20
b) 20-25 years
c) 25 to 30 years
d) 30 to 40 years
e) Above 40
7. How many years you spent in education? ..................................
a) Not educated at all
b) Less than 5
c) 5-10 years
 d) 12 years
e) Above 12
8. How many children have you had before joining AIM scheme? ------------------
a) Unmarried
b) Married but no children
c) 1
d) 2
e) More than 2
9. How many children do you have now? ---------------------
a) Unmarried
b) Married but no children
c) 1
d) 2
e) More than 2
10. How many children do you have in school?
a) Unmarried
b) Married but no children
c) 1
d) 2
e) More than 2
11. How many members who live with you in your house? -----------------
a) 0
b) 1
c) 2
d) 3
e) More than 3
Section 4: Socioeconomic Information
4-1. Saving Information

12. Do you make any saving?

a) Yes
b) No
c) Sometimes
d) Most of the time
e) Never

13. If yes, where do you always put your savings?

a) Bank account
b) In house
c) Community saving service
d) Others/ please specify…………………….

4.2. Business Training

14. Have you received any training before joining group lending?
a) Yes
b) No
15. If yes, please indicate to the type of the training………………..

4.3. Access to job before borrowing

16. Have you had a job before joining AIM microcredit scheme?

a) Yes
b) No
17. If yes, which type of job that you had? _______________________

Section 5: Livelihood

5.1. Household Income

18. How much do you estimate the average monthly income of your household? -----------
5.2. Household Assets
19. How much did you spend on household assets, in the last year? ………………….
20. Please indicate to the type, quantity and the price of the following assets that household purchased
past one year. Please tick (√) the appropriate answer.
Assets of Household (√) Quantity Price (Rs.)
a) 1- Car
b) 2-Rickshow
c) 3- Computer
d) 4-Motorcycle
e) 5- T.V
f) 6- VCR/EVE player
g) 7- AC
h) 8- Gold/Siler/
Jewellery
i) 9- Mobile phone
j) 10- Dowry
k) Others/ specify
Chapter-4

Data Analysis
4.1 Introduction
This chapter consists of data analysis and for data analysis SPSS 20.0 has been used. In this chapter
analysis has been done in two parts, first part is about descriptive statistics which is carried out to get the
frequencies distribution and graphical presentation of the data through tables and pie charts. The second
part is about inferential statistics in which reliability analysis (Cronbach’s Alpha is calculated) and
correlation has been done to know the direction and strength of relationship of independent and
dependent variable. To get the significance level and the mean difference between Microfinance Loan
cycles and their impact on women empowerment one way ANOVA test has been carried out to test the
hypothesis for the study and at the end we have a brief conclusion for the chapter.
4.2 Descriptive Analysis
This analysis is carried out to know the demographic characteristics of the sample in the area of study
beside that it will be beneficial in getting the objectives of the study. For categorization and analytically
summarizing the research data in a logical form the descriptive analysis is used (Nachmias, 1992). The
descriptive analysis for the current study is based on percentages and classification of data.
 References

Lists of Books/journals/Articles

 Latifee, H.I (2006) “The future of Micro-Finance: Visioning the who, what, when, where, why and
how of micro-finance; expansion Over the Next 10 Years, Grameen Trust publication
 Otero, Maria. (1989a). Breaking Through: “The Expansion of Micro-Enterprise Programmes as a
Challenge for Non-Profit Institutions”. Cambridge, MA: ACCION International
 Ledgerwood, J. (1999) “Sustainable Banking with the Poor: Microfinance Handbook, An Institutional
and Financial Perspective”, The World Bank, Washington, D.C.
 Morduch, Jonathan & Haley, Barbara (2002) Analysis of the Effects of Microfinance on Poverty
Reduction, NYU Wagner Working Paper No. 1014, New York University, New York
 Jegede, Charles.A. Kehinde, James and Akinlabi, Babatunde Hamed (2011), “Impact of Microfinance
on Poverty Alleviation in Nigeria: An Empirical Investigation”, European Journal of Humanity and
Social Science. Vol. 2.
 Singh, Surjeet, (1990): “Rural Credit: Issues for the Nineties” Economic and Political Weekly, no.
November 17 2531-2535.
 Reynaldo Marconi and Paul Mosley (2006) “Bolivia during the global crisis 1998– 2004: towards a
‘macroeconomics of microfinance” Journal of International Development Volume 18, Issue 2
 Ted K. Bradshaw (2006) ”Theories of Poverty and Anti-Poverty Programs in Community
Development” Rural Poverty Research Center-RPRC Working Paper No. 06-05, 214 Middlebush
Hall, University of Missouri, Columbia MO 65211-6200.
 Sen Binayak; (1989); “Moneylenders and informal financial markets: insights from Hoar areas of
rural Bangladesh” Research Report No. 100, Bangladesh Institute of Development Studies
 Yunus, Muhammad (1999), “Banker to the Poor: Micro-lending and the Battle against World
Poverty”, New York: Public Affairs.
 Mohammad Arifujjaman Khan and Mohammed Anisur Rahaman (2007), Impact of Microfinance on
Living Standards, Empowerment and Poverty Alleviation of Poor People: A Case Study on
Microfinance in the Chittagong District of Bangladesh”. Umea School of Business (USBE)
  Pitt, Mark M.; and Shahidur R. Khandker. (1998) “The Impact of Group-based Credit Programs on
Poor Households in Bangladesh: Does the Gender of the Participants Matter?” Journal of Political
Economy, Vol. 106, No. 5.
 Hulme, D and Mosley, P. (1996) “Finance against Poverty” Vol.2 London: Routledge
 Pitt, M. and S. R. Khandker (1996), “Household and Intra-Household Impacts of the Grameen Bank
and Similar Targeted Credit Programs in Bangladesh”. Washington DC, World Bank.
 Armendariz de Aghion B., (1994). “On the Design of a Credit Agreement with Peer Monitoring”,
Journal of Development Economic 60, 79-104

Websites Sources

 http://www.daily.pk/undp-reports-pakistan-poverty-declined-to-17-under-musharraf-10324/