The Success of Micro Finance in Pakistan :: Finance

As found by Hartangi (2007) that success of Micro finance depends upon the practices of that specific bank, which finance poor people, by quoting and example of BRI (Bank Rakyat, Indonesia) researcher says that they provide technical and moral support to the people they lend money, and make sure they do good, they also choose different collaterals like motorcycle, cars, cattle, and land etc to secure their loan yet making collateral stronger incase the client fails to repay and credits interesting for lower class community. Beside this, Risk management, internal audit, financial procedures, transparent system, dedicated staff, and clear incentives to staff and clients are the factors which contribute toward the successful lending of micro finances. Obamuyi (2009) says that poor credit culture and low risk management can result in low rate of return, which finally ends with the failure of the scheme. The risk of low rate of return can also be minimized by the assistance provided by th e MFIs to develop the small business of clients (Zelealem, Temtime, & Shunda, 2003). RESEARCH METHADOLOGY Study type This study is a correlational study in which relation between income level, living standard, access to education, and empowerment due to micro financing in Pakistan is studied. Study setting Study was conducted in natural environment, and no lab settings were used while studying the relationship between income level, empowerment, access to education, and access to health facilities due to MFIs in Pakistan has been studies, which makes this study a non-contrived study. Unit of Analysis Different individuals, who obtained micro finances from Micro financial institutions of Pakistan, were asked to record their responses. Time Horizon Data was collected from individuals who obtained micro finances from MFIs in Pakistan once in one month time period; there will be no further data collection for this study. The collected responses are one shot, which make this study a cross-sectional study. Data This study utilized primary data as well as secondary data. Primary data was gathered from individual who obtained micro finances from MFIs in Pakistan, data was gathered using a prepared research instrument. And secondary data was collected for literature review, from different online research databases. Data Analysis Data was inspected, cleaned, transformed and modeled using SPSS V.17.0 to highlight useful information. Linear Regression was applied as per the requirement of the study to explore the relationship between increase in income, living standard, access to education, and empowerment, due to MFIs in Pakistan. Sampling type A non probability convenience sampling was done, questionnaire were distributed among customers of MFIs who were conveniently available to the researcher.