Micro-Financing: A Comparative Study of Bangladesh & Pakistan

Abstract

Purpose: The purpose of the study is to examine impact of micro-financing on poverty alleviation, access to finance and economic growth by comparing Bangladesh and Pakistan.

Design/methodology/approach: Panel data of 56 microfinance institutions drawn by simple random sampling from 2002 to 2013 has been collected from financial statements of microfinance institutions and World Bank. Diagnostic tests, variance inflation factor (VIF) and breusch pagan have been applied to check muticollinearity and heteroscedasticity respectively. Data has been analyzed using fixed effect model as indicated by Hausman test.

Findings: The analysis evidently authenticates that micro-financing has more significant impact on poverty alleviation and economic growth in Pakistan than Bangladesh. At the same time, access to finance in Bangladesh has more noteworthy impact than that of Pakistan.

Originality/value: This study brings to light culmination since beginning of micro-financing on the basis of outcome, experience and comparative regional arrangements helpful for all stakeholders and regulatory authorities in both countries.