Top PDF Integrated waqf based islamic microfinance model (IWIMM) for poverty alleviation in OIC member countries

Integrated waqf based islamic microfinance model (IWIMM) for poverty alleviation in OIC member countries

Integrated waqf based islamic microfinance model (IWIMM) for poverty alleviation in OIC member countries

Poverty dominates the agenda of developing countries. Poverty was and still is one of the major impediments of human progress and societal development. Its existence is as old as human history while its alleviation is attributed to effective and successfull economic policies. Various approaches/policies are offered towards reducing poverty. These policies vary depending on time, space and the country concernced. However, reduction of poverty the major goal of many economic systems as stated by the Millenium Development Goals, thought sometimes not explicitly stated It was found that in OIC member countries religious and cultural norms drive preference of Islamic microfinance over conventional microfinance.The study further developed an Integrated waqf based Islamic micrfinance model (IWIMM) for poverty reduction in OIC memebr countries.This is expected to overcome the challenges of conventional microfinance such as, high cost of capital, low quality of human resource, vulnerabilites of poor borrowers due to lack of sustainable takaful and limited products for the clients with different occupationanl backgrounds. However, the model is yet to be verified empirically. Thus, further studies should be conducted to test the model using quantitative techniques such as, structural equation modelling (SEM). © IDOSI Publications, 2014.
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Poverty Alleviation via Microfinance using the Concept of Mudharabah

Poverty Alleviation via Microfinance using the Concept of Mudharabah

Poverty alleviation and eradication has been at the forefront of many global development agenda such as the Organisation of Islamic Cooperation (OIC), the World Bank as well as United Nations in their Sustainable Development Goals. Despite continuous efforts, a considerable part of the world population remains trapped below poverty line and live in unsatisfactory conditions. Poverty is a multi-dimensional concern, extending beyond monetary aspects per se. It is associated with among others, poor human resources, economics, and provisions for social services. Over 30% (1.6 billion) people worldwide are living in multi-dimensional poverty, of which 29% (465 million) are from OIC member countries (SESRIC, 2015). The CEO of AlHuda Centre of Islamic Banking and Economics also highlighted that Muslim population accounts for 24% of total global population and half of global poverty reside within Muslim countries due to unemployment, lack of education and political instability (Mughal, 2014). If the issues of poverty within the Muslim community are not tackled at its root, we would see such scenario prolonged which will hamper the development of the overall Islamic economic system.
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Integrated Waqf-Islamic Microfinance Model (IWIMM) for poverty reduction: case studies of Nigeria, the Sudan and Pakistan

Integrated Waqf-Islamic Microfinance Model (IWIMM) for poverty reduction: case studies of Nigeria, the Sudan and Pakistan

PAKISTAN POVERTY ALLEVIATION FUND (PPAF) was established in 2000 as an apex body to reach the poor communities through the NGOs and Community Based Organizations (CBOs).  BENAZIR INCOME SUPPORT PROGRAM (BISP) was launched in 2008 to provide cash grant of Rs. 1,000 each month to the families having income of less than Rs. 6,000 per month. The graduation programs including Waseela-e-Rozgar, Waseela-e-Haq, Waseela-e-Sehat and Waseela-e-Taleem have been started to transition poor form the poverty

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Integration of waqf-Islamic microfinance model for poverty reduction: the case of Bangladesh

Integration of waqf-Islamic microfinance model for poverty reduction: the case of Bangladesh

Hasan (2010) develops the idea of an integrated model that combines IsMF with zakah and awqaf institutions for poverty alleviation. First, zakat fund will be given to the borrowers (hard-core poor) for their consumption need whereas the awqaf fund will be used as investable fund that will work as capital investment and working capital for micro-business. It will minimize the risk of loan default as the consumption needs of the poor borrowers have already been satisfied. One of the characteristics of this model is that it will ensure the equitable distribution of income and welfare for the poor. As the proposed model is fully based on profit-loss-sharing and concessional contract modes, the distribution of profit or earnings will be allocated as per the contribution of capital among the depositors, shareholders and investors in the NGO. Furthermore, the burden of debt is less on the poor under this model, as the provision of zakat fund does not require any repayment. As the model is based on profit–loss-sharing principle, no fixed interest payment will be imposed on the borrowers. It is argued that all these factors will lower the chances of default rates and thus contribute to higher success rate of poverty alleviation.
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Development Of Waqf Based Microfinance And Its Impact In Alleviating The Poverty

Development Of Waqf Based Microfinance And Its Impact In Alleviating The Poverty

The purpose of this paper is to discuss the potential role of the institution of Waqf in poverty alleviation. Poverty is a complex, multi-dimensional phenomenon that has captured the attention of numerous scholars and agencies globally. The social role of the Islamic financial sector can be best exemplified by providing finance to the poor to increase their income and wealth. This paper will explore on how microfinance can be provided on Shariah compliant basis through Waqf model. This research also reviewing the development of the integrated Waqf based Islamic microfinance which aimed to provide solutions to reduce poverty. An integration of Waqf-based Islamic microfinance (IWIM) model is proposed to address all the practical challenges of microfinance faced in Muslim communities. In this model, microfinance is practised in compliance with Shari’ah to address the multi-dimensional aspects of poverty and empowering the poor in order to enhance the socio-economic development and hence the well- being of the Ummah. With this aspiration, the IWIM model aims to tackle the challenges related to the scarcity of capital, inadequate human resources, absence of proper Takaful programs and project financing in an integrated approach. However, Waqf based microfinance still may be facing some problems should be addressed which related to credit risk, moral hazard, and economic viability.
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Enhancing the Enforceability of Islamic Microfinance Contracts in OIC countries

Enhancing the Enforceability of Islamic Microfinance Contracts in OIC countries

After the global financial crisis, global unemployment has increased to record 197 million job seekers worldwide in 2011, where 74.7 million are youth unemployed. Upward trends in both the adult and youth unemployment make estimates possible to reach 202 million in 2013 4 . The MENA region has to create up to 70 million jobs by 2020 to match the global employment rate’s pattern 5 . The OIC 6 member countries, with a population of 1.57 billion people, displayed important unemployment rate (9.4% in 2010) 7 which exceeds the global rate (6% in 2011). North African countries, which have strong direct trading and migration ties with the EU countries, have suffered from return migration from Southern Europe, leading to deeper stress to their labor markets. The lack of employment opportunities is the strike problems these countries are facing, due to demographic growth, skills mismatches, the rigidity of the labor markets, and the weakness of the private sector. In 2012, the female youth unemployment rate was estimated to 37%, six times more than the rate of adult men 8 . In the Middle Eastern countries, the unemployment rate varies cross-countries. In one hand, the economic growth of oil exporting economies (like Qatar, Kuwait and United Arab Emirates) exceeded 6% in 2012, and unemployment rates were low (0.5% in Qatar and 2.7% in Kuwait), except for countries where stability is not preserved such as Iraq and Iran. On the other hand, oil importing countries are struggling with low levels of economic growth, and double-digit unemployment rates 9 . Among the 192 member countries of the United Nation, over 130 of them are classified as developing countries which are in general not only facing high unemployment but also high rates of poverty . According to estimates by the World Bank, more than 1.6 billion people were classified as poor in 2009, with the majority of them live in rural areas. In Middle East, 30.2% of the total population was either poor or near poor 10 in 2011, a medium percentage compared with the global rate in developing world, 58.4%, while it reaches 61.1% in North Africa and 92% in South Asia. Following the success of the Grameen Bank in Bangladesh, microfinance has been considered to be a new financial model for poverty alleviation in developing countries . In 2006, Grameen Bank and its founder Mohamed Yunus were awarded the Nobel Peace Prize for “their efforts to create economic and social development from below” 11
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Infrasturactural Development in Organisation of Islamic Cooperation (OIC) Member Countries: Sukuk Mode Financing as an Alternative

Infrasturactural Development in Organisation of Islamic Cooperation (OIC) Member Countries: Sukuk Mode Financing as an Alternative

Furthermore, Organization of Islamic Cooperation (OIC) was established in Rabat, Kingdom of Morocco on 25 th of September 1969 upon a decision of the historical conference staged because of atrocities committed in Al-Aqsa Mosque in Palestine. In the following year, Islamic Conference of Foreign Minister (ICFM) was held in Jeddah and chose the city as its permanent Secretariat. Three years later (1972), the first OIC Charter was adopted by the 3 rd ICFM. Here, the objectives and principles of the organization were stipulated. Its fundamentals purpose is to strengthen the solidarity and cooperation of the member state. Presently, the organization is the second largest inter-governmental organization after the United Nation (UN) boasting of 57 nations across four continents (www.oic-oci.org). It has permanent delegations to the United Nations and the European Union as well the official languages of the OIC are Arabic, English, and French. Since the 19th century, some Muslims had aspired to Ummah to serve their common political, economic, and social interests, goals.
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Microfinance Lending Program of  Cooperatives  in Cebu, Philippines: Realities,  Benefits  and Women’s Participation

Microfinance Lending Program of Cooperatives in Cebu, Philippines: Realities, Benefits and Women’s Participation

The study examined the contributions of microfinance programs channelled through cooperatives for the government‘s poverty alleviation thrust particularly among microcredit beneficiaries. We implemented the study through personal interviews with management representatives from sample cooperatives and randomly selected cooperative members who were microfinance program beneficiaries. The study used qualitative-quantitative descriptive survey design utilizing primary and secondary data from sample cooperatives and their members. Majority of the interviewed respondents were women. Government microfinance program have led to improved assets, capital build-ups and profits of cooperatives. As noted, income levels increased among microfinance program beneficiaries. Augmentation of family and household incomes subsequently improved the living standards of member recipients. There was expanded access to microcredit and education by children of program beneficiaries. Women empowerment was evident with strong participation of wives in leading micro-entrepreneurial activities. However, with relatively large household size, exits from the poverty threshold among member households were not substantial. The study also found that many member beneficiaries keep renewing their loans becoming habitual/perennial borrowers from micro-credit lending with availed loans not used anymore for microenterprise activities. We recommend that access to microfinance program should be strengthened and sustained especially for cooperative members in the low income groups.
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The Role of Islamic Microfinance in Poverty Alleviation: A Case of Esaar Microfinance Program of Helping Hand for Relief and Development (HHRD)-Pakistan

The Role of Islamic Microfinance in Poverty Alleviation: A Case of Esaar Microfinance Program of Helping Hand for Relief and Development (HHRD)-Pakistan

Frasca (2008) undertakes two seminal case studies in the use of Islamic finance instruments in MFIs: a) the Sanduq project in Jabal Al-Hoss, Syria; and b) the Hodeidah Microfinance Programme (HMFP) in Hodeidah, Yemen. He concludes that Islamic MFIs can be both competitive with conventional MFIs in the region and meet the reported demand for religiously tailored financial services for lower income groups. If we are to assume that microfinance, in general, can improve the standard of living and alleviate poverty, Islamic MFIs appear to be doing as well as their conventional microfinance counterparts. Karim et al. (2008) conducted a survey, which includes 125 institutions in 19 Muslim countries. It shows that Islamic microfinance providers still reach only 300,000 clients, one-third of them in Bangladesh alone. They argue that to reach more people and build sustainable institutions, it is essential to focus on designing affordable products, training and retaining skilled loan officers and administrators, improving operational efficiency, and managing overall business risk.
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Role of Waqf in Sustainable Economic Development and Poverty Alleviation: Bangladesh Perspective

Role of Waqf in Sustainable Economic Development and Poverty Alleviation: Bangladesh Perspective

Waqf is one of the sources of Islamic Economic system. It refers to the voluntary charity which has unique presence in Islam. Islamic law is the first law ever that defines and regulates Waqf as a civil societal institution. It started since the time of the Prophet Muhammad (PBUH) himself. Waqf before Islam was always a religious exercise when a rich person assigns a property to the temple and monks would use it for the temple expenses. In present, it has proved around the globe that Micro Credit and Safety Net Program are not successful in reducing poverty and income inequality. In this context, Waqf can be one of the vital alternatives alongside Zakah because early history indicates free education, scholarship, orphanage, free treatment etc as provided by Waqf based institutions. But current scenario shows that, Waqf based institutions are not growing at a considerable level. If we really want to do something for the needy and the poor, we have to revive this much needed institution. This paper shares and explores the current status of the Waqf sector in Bangladesh from socio-economic perspective and underlines the areas that need a fresh look for revitalization and proper utilization of Waqf. The paper also tries to assess the role of Waqf in sustainable economic development and reducing poverty in the context of Bangladesh. There are some specific suggestions and recommendations that deserve serious consideration for the development of Waqf in the country.
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Islamic Banks Financing and Poverty Alleviation in Sudan

Islamic Banks Financing and Poverty Alleviation in Sudan

The continuous regressions in the per capita income of the Sudanese people have triggered many suggestions to ameliorate their productive capabilities. One of them was the facilitations in financing programs through official channels. However, there are many structural impediments that inhibit those programs. One of the financial programs was the Small or miniature financing in addition to the establishment to specialized Banks as the Family Bank. The current paper discusses issues of financing in Sudan as part of programs initiated to improve income per capita. Islamic and regular financing systems are analyzed in order to explain existing impediments. Then Family Bank systems and financing facilities are discussed. Results explained in this paper clear the facts that there are other macroeconomic impediments and distortions that have negative impacts on feasibilities of conducting normalized productive activities. One of them is the accelerating inflations rates and foreign currencies exchange rates. That is in addition to the indigenous distortions of inflated taxation rates that render smaller capitals from gaining profits on small scale. The expected productive cycles and variables are not subjected to the rule of Ceteris Paribas where cost can change. That adds to the difficulties in gaining the financing per se which are represented in the required time, bureaucratic processes, required collaterals and higher interest rates. Even in the Islamic financing, the methodologies applied do not differ from the traditional in interest rates. Both are subtracted from final productive outputs. The expected Zero Interest Rates expected from such small production/income improvement financing projects do not exist. The final results are manifested in lesser beneficiaries, less expected incomes with diminishing internal return rates.
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Movements of Islamic Stock Indices in Selected OIC Countries

Movements of Islamic Stock Indices in Selected OIC Countries

Several advantages can be obtained from stock market integration in the OIC members. Besides making the market more efficient and competitive through investors’ diversification, the OIC member can get access to broader range of shares such as stock with low and high prices, price stock that spread for a defined period of day, month or year and stock price volatility. There are empirical studies elaborate the existence of stock market integration in OIC countries (Marashdeh, 2005; Ergun & Hassan, 2007; Majid et al., 2007; Nor, 2012; Paskelian et al., 2013). These studies mentioned that stock market integration present in the OIC members. These works are conducted for conventional stock market in OIC countries. There are few studies done on Islamic stock market but not specified to examine the present of cointegration of Islamic stock market in OIC countries. It will be interesting to know whether long-run relation in Islamic stock markets exist within OIC countries where Islam is the main religion. Looking through empirical investigation on selected Islamic stock markets linkages from different region in the period during and post crisis, this paper intends to achieve the following objectives: 1 To examine the changes in the cross market linkage among six selected OIC countries during crisis
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Cash waqf as an alternative panacea to poverty alleviation: An overview of human development in Nigeria

Cash waqf as an alternative panacea to poverty alleviation: An overview of human development in Nigeria

instance, the United Nations International Children’s Emergency Fund (2013, p. 5) statistical report shows that, 72% of rural populace did not have access to improved sanitation facilities. Again, statistics depict that, 53% of the rural populace do not have access to adequate drinking water, (United Nations International Children’s Emergency Fund (2013, p. 1). Furthermore, 70% of households who conducted the survey never attended school (Olowa, 2012, p. 31). Additionally, 42% of the pop- ulace among female between the age of 15-24 in the period of 2008 to 2012 were not literate (UNICEF, 2013, p. 2). The Poverty rate increased from 17.7 million in 1980 to 68.7 million in 2004 (Olowa, 2012, p. 30). In addition, the aforementioned author argued that 12% of the population of the first quintile and 8% of the pop- ulation of the fifth quintile respectively consulted traditional healers among other indicators (Olowa, 2012, p. 31). Poverty has deprived people of good health, shel- ter, education and the basic necessities of life. Government has held to their point that the education sector is not purely their responsibility alone. (University World News, 2014, p. 3). Therefore, funding in the governmental sector is least expected due to the insensitivity of the government towards education. The Private sector would appear to be expensive for the purpose of poverty alleviation especially in the education sector due to the high cost of borrowing as well as the sector’s profit motive (Werker & Ahmed, 2007, p. 7).
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Microfinance and Rural Poverty Alleviation: A Reality?

Microfinance and Rural Poverty Alleviation: A Reality?

It is on record that about half of the world's population (about three billion people) lives on income of less than two dollars a day (Goel and Rishi,2012) while 70 percent of the extremely poor live in rural areas (IFAD, 2011, Mustapha et al,2014). This is also aggravated by the fact that one child out of five living in these poor communities does not live to see his or her fifth birthday! Hence, in September 2000, the United Nations declared Millennium Development Goals (MDGs) in order to ensure global development. The major policy thrust of this program is to make life more meaningful to the poor and downtrodden. By implication, reduction of poverty and hunger is adjudged to be the basic root of all other problem issues focused on MDGs (Kalirajan and Singh, 2009).
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A Study on the Impact of Ethical Behaviour of Firms on Global Competitiveness Ranking

A Study on the Impact of Ethical Behaviour of Firms on Global Competitiveness Ranking

Microfinance provides financial and non financial services such as credit, insurance, remittances to unemployed or low individual especially women. Microfinance is emerging as an important tool in empowering women economically, socially and politically. Microfinance helps women in access to credit from financial institution and removes them from the clutches of moneylenders. The present paper examines the impact of Microfinance on income of the poor women. Whether Microfinance has resulted in improvement of income of women. The Haldwani region of Uttarakhand is selected. Primary data is enumerated from a field survey in the study region. The Researcher has used SPSS 21 paired t test for analysis purpose. The analyze shows that there is a significant impact on the income of women due to microfinance.
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Impact of Microfinance on Poverty Alleviation: A Global Analysis

Impact of Microfinance on Poverty Alleviation: A Global Analysis

The cross-section estimation shows the positive impact of microfinance on poverty alleviation at the macro level. The larger impact of the percentage of female borrowers has been observed in multidimensional poverty. The impact of the number of active borrowers and gross loan portfolios is much higher than that of any other explanatory variable included in the analysis. We also find that the key variables of our analysis remain negative and statistically significant after including the regional dummy. Results for regional dummies show that East Asia and the Pacific, Eastern Europe and Central Asia, Latin America and the Caribbean, and the Middle East and North America have negative and statistically significant coefficients with reference to South Asia at a 5% level of significance. In the meantime, Africa has a positive coefficient although statistically insignificant, suggesting that in Africa, the effect of MFI activities on poverty is not great. Table 8 shows the impact of microfinance on poverty in terms of head count ratio and poverty gap using level data of explanatory variables instead of log variables. The different columns represent the estimation showing the microfinance activities effect with and without regional dummies on poverty. In all specifications, the results are statistically significant but magnitudes are relatively small. Table 9 shows the microfinance effect on three dimensions of poverty: living standard, health and education. We use a log-level model for this estimation. The cross-sectional regression shows a significant impact of microfinance activities on these three dimensions of poverty. Table 10 demonstrates the cross-sectional regression interaction between poverty and legal status of MFIs and region. The estimated coefficient shows that a higher number of female borrowers can decrease the poverty head count ratio. Table 12 shows the cross-sectional regression for instrumental variables used to remove the simultaneous equation problem from our model. Our main objective with the instrumental variable estimation is to remove or solve the problem of endogeneity of the microfinance activities and poverty incidence. The coefficient of the number of active borrowers is negatively and statistically significant at a 5% level, overcoming the heteroscedasticity with and without regional dummies. We conduct three tests: an F test for weak identification, Sargan’s test for over-identification, and an under-identification test. We observe from these tests that we fail to reject the null hypothesis, which is that our instrument has no correlation with the error term. Table 11shows the validity of our instruments; if we use only one instrument - legal origin - we observe that poverty reduces the impact of the number of active borrowers.
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Microfinance: Champion in Poverty Alleviation and Failure in Female Empowerment

Microfinance: Champion in Poverty Alleviation and Failure in Female Empowerment

politicization of women. Green’s theoretical representation of the state, according to which the state is invested with social responsibilities for its citizens, epitomizes well the necessity for democratic political inter- ventionism. Moreover, the lack of correlation between microfinance and empowerment is also related to female wages and lack of participation. Overall, women’s incomes are too low to allow them to be self-reliant: they remain limited in their productivity and seriously disadvantaged (Mayoux 2003). Therefore, microfinance programs have to go beyond their current embryonic stage of development and promote a stronger »mentoring« function in order to overthrow the current support of such programs which is too punctual, and not enough oriented to long term outputs. In addition, if development is understood as a process of expanding real liberties and poverty as the privation of elementary capacities (for example, equal access to power), then political and social liberties are constitutive of development and cannot be subordinated to economic priorities (Sen 2000). Henceforth, the main aspect which must be promoted is political intervention and exogenous support for the emergence of strongly entrenched democracies in ldc , which would make possible the de-instrumentalization of women (Rahman 1999). Democracy plays a normative role, guaranteeing respect for norms, thereby ensuring a climate generally favorable to equality of opportunity (Clinge et al. 2005) and ensuring further decreases in poverty.
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Microfinance Institutions And Poverty Alleviation In Abia State, Nigeria

Microfinance Institutions And Poverty Alleviation In Abia State, Nigeria

The quest to alleviate poverty in Nigeria has been the central plank of the three tiers of government. Nigeria popularly called the giant of Africa is a country-nation blessed with abundant resources. Among others, the country is richly blessed with agriculture, gas, petroleum, solid mineral and human resources. Yet the country still wallows in abject poverty. Nwaobi (2003) posits that Nigeria presents a paradox. The country is rich but the people are poor. With the abundant resources in the country, Nigeria should rank among the richest countries that should not suffer poverty sting. Alas, the colossal increase in the level of poverty has made the socio- economic landscape brittle. Today, Nigeria is ranked among the poorest countries in the world (Oshewolo, 2011). A study at the majority of the people, describe widespread penny-pinching as the standard of living has gone down to low income, persistent common diseases and hunger. Only a few men can afford good education to themselves and their children, health care services, good roads and shelter. This has led to increase in crime, youth restiveness, child abandonment, free trade kidnapping, betrayal from all angles, reduction in life expectancy, closure of businesses and frustration. To arrest this situation, the government of Nigeria, initiated policies and structures which include, the Operation Feed the Nation (OFN), the Directorate of Food, Roads and Rural Infrastructure (DFFRI), Better Life Programme (BLP) National Directorate of Employment (NDE), Structural Adjustment Programme, Peoples Bank of Nigeria (PBN), Community Bank (CB), Family Support Programme (FSP), Family Economic Advancement Programme (FEAP), National Agency for Poverty Eradication Programme (NAPEP), National Economic Empowerment Development Strategy (NEEDS), State Economic Empowerment Development Strategy (SEEDS) and Local Economic Empowerment Development Strategy (LEEDS). Their aims are to ameliorate the suffering of the people by providing them employment opportunities and have access to credit facilities without stringent conditions to enable them establish their own businesses. This credit facility is referred to as microfinance.
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Impact of Microfinance Banks Activities on Poverty Alleviation in Nigeria

Impact of Microfinance Banks Activities on Poverty Alleviation in Nigeria

The result in the above equation shows an intercept of 39.06. This value is positive but statistically insignificant with p-value of 0.14 greater than 0.05. This is an indication that poverty index will be constant at 39.06% when there is no change in the explanatory variables. The coefficient of total deposit to total credit (RTD_TC) is negative but not significant for p-value of 0.39 is greater than 0.05. However, the negative coefficient (-6.057) of RTD_TC showed that for every one per cent (1%) increase in RTD_TC over the period of study holding other variables constant, poverty index decreased by approximately 6.057%. In other words, an inverse relationship exists between RTD_TC and poverty index. This is encouraging as it is consistent with empirical evidence (Okpara, 2010;Audu&Achegbulu 2011; Ilegbinosa & Opara 2014). The implication is that the more people deposit money in microfinance banks, the less the index of poverty in Nigeria for the banks will have more money to lend.
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What Impact does Microfinance Loan Have on Incomes of the Rural Poor in Nigeria?

What Impact does Microfinance Loan Have on Incomes of the Rural Poor in Nigeria?

Poverty means deprivation from the basic essentials of life. The level of poverty is determined by the income level and degree of inequality among others. The roles of microfinance in poverty reduction have attracted various researchers to the extent that different opinions have been formed (for example, Noruwa and Emeka, 2012). While some researchers conclude that microfinance loans are mainly used for health, education of school children and production related expenses, others are of the opinion that microfinance has played a tremendous role in reducing the depth and incidence of rural poverty and serves as aid for shocks from natural disaster and health related calamities. Even microfinance reduces poverty at the macro level (Anriquez, and Stamoulis 2007). Microfinance Institutions (MFIs) are expected to provide credit to the poor since the conventional banks consider microcredit loans to be risky because the poor cannot provide collateral (Morduch, 1999). Hence, Microfinance loan is regarded as panacea to alleviate poverty and increase household incomes (Aigbokan and Asemota, 2011). In view of this, scholars have made it expedient to carry out studies on the effectiveness of the programmes. For instance, Khandker and Pitt (1998) studied the impact of microcredit on 1,798 households in Bangladesh and concluded that the loan obtained by women in particular increased the household expenditure, family level of education and good nutrition among others. In the same vein, Morduch (1998) conducted research on the impact of microcredit on about 1,800 microfinance clients and non- client households taken from 1991-92 Cross-sectional survey in Bangladesh. The findings revealed that microfinance loans encourage mild increase in consumption and less vulnerability of the clients to poverty. Also Khandker (2005) conducted research on microfinance and poverty in Bangladesh; and concluded that there was 20 percent increase on microcredit given to women. The research further emphasised that impact of microfinance is always greater on the extreme poverty than the moderate one and that microfinance accounted for 40 percent of the entire reduction of moderate poverty in rural Bangladesh. Coleman (2002) studied the beneficiaries of microfinance in Northeast Thailand. It was opined that the wealthy people do participate in microfinance loan and become wealthier. Edgcomb and Garber (1998) assessed the microfinance participants and non-participants in Honduras. It was revealed that the profits of microfinance loan participants increased by 75 percent over that of non-participants.
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