Impact of Micro Credit on Poverty Alleviation: A Case Study of District Ghotki, Sindh, Pakistan

Abstract

Low-income individuals can improve their socioeconomic situation and raise their income by using microcredit as a financial tool. The main objective of microfinance institutions is to reduce poverty. In order to better understand how microcredit institutions might reduce poverty and improve socioeconomic conditions, this study focused on the Ghotki district in Sindh. 384 active borrowers with credit histories with the microfinance institution were chosen at random using a random sampling technique in order to determine the study question's conclusion. Evaluating the effect of micro lending on the eradication of poverty and improvement in the socioeconomic situation of the borrowers, three different statistical methods were used: the chi-square test, the paired t test, and the independent t test. The p-value for the variable's improvement in standard of living, income, and employment opportunities is predicted to be 0.03 (0.05 level of significance), 0.000 (0.05 level of significance), and 0.000, respectively. The results demonstrate that microcredit improves socioeconomic factors like income, education, health care, consumption, and the growth of jobs, as well as the wellbeing of the borrower. The study recommended that microfinance organizations increase their visibility in rural and semi-urban areas of Sindh. Microfinance organizations ought to create more adaptable financial solutions for the nation's kids and other low-income populations. The MFIs and government organizations should set up training sessions and workshops to help borrowers make good use of their loans. The government should lower lending rates for the poor in order to accomplish social and economic development in the nation, and it should particularly support the household-based industry.

https://doi.org/10.5281/zenodo.10496444