Micro Finance and Economic Development: The Role of Microfinance Institutions Outreach in Pakistan

Microfinance focuses on economic development at a minute level. Microfinance is adopted to reduce the poverty level in the economic system. This study is conducted to investigate the microfinance institutions' outreach, its growth, and challenges faced by the Microfinance Banks (MFBs) and Microfinance Institutions (MFIs). Data is collected from MFBs and MFIs working in Muzaffarabad as well as from interviews and focus group discussions. Findings are based upon lending, headcount ratio, offers, the value of their offer, and the possible growth chances of microfinance in Muzaffarabad. In addition to this, the challenges associated with microfinance outreach have been highlighted during analysis and guidelines have been provided to the MFBs and MFIs to increase their outreach. The sector is financially unstable which is attributable to its reliance on conventional sources of funding. The industry faces several endogenous as well as exogenous challenges from its environment which obstructs its growth. Further, it helps the policymakers to work on the development of the region and provide the base for further future research work.