Article Metrics

Article abstract view : 491 times
PDF full text: 0 times

Investigating the Rural and Entrepreneurial Development through Microfinance

Zahoor Ahmad Parray, Shabir Ahmad Bhat, Raouf Ahmad Ahmad Rather, Pirzada Sajad Ahmad


Microfinance has been evolving to be a decisive factor in poverty reduction, rural and entrepreneurial development. This research aims to find out the impact of microfinance on rural/socio-economic development and entrepreneurial skill development. Particularly, this study attempts to explore the impact of microfinance on social development, financial empowerment, education, healthcare, economic independence, and entrepreneurial development. Data was collected through questionnaires taken from the beneficiaries of the National Rural Livelihood Mission (NRLM) erstwhile Swaran Jayanti Shahri Rozgar Yojana (SJSRY) microfinance scheme in the Union Territory of Jammu and Kashmir, India. A purposive sampling method, exploratory factor analysis, and paired sample t-test were used in this study. The findings prove that microfinance facilitates social development, improved financial empowerment, and promotes decision-making relating to education and healthcare among beneficiaries. The finding also indicates that microfinance helps to increase entrepreneurial skill development among the beneficiaries. This study offers an insight how microfinance eliminates poverty and facilitates social development as well as entrepreneurial skills. These findings have essential implications for academics, policymakers, and microfinance institutions.


Microfinance; Rural Development; Social Development; Financial Empowerment; Education; Healthcare; Entrepreneurial Development

Full Text:



Abrar, A., Hasan, I., & Kabir, R. (2021). Finance-growth nexus and banking efficiency: The impact of microfinance institutions. Journal of Economics and Business, 114, 105975.

Agboola, M. G., & Osunde, C. (2012). Microfinance and entrepreneurial development in Nigeria. JORIND, 10(3), 405-410.

Ahmad, N. M., & Ahmad, M. M. (2016). Role of microcredit towards socioeconomic empowerment of Pakistani urban women. The Anthropologist, 26(3), 189-197.

Al-Mamun, A., Wahab, S. A., Mazumder, M. N. H., & Su, Z. (2014). Empirical investigation on the impact of microcredit on women empowerment in urban Peninsular Malaysia. The Journal of Developing Areas, 287-306.

Angelucci, M., Karlan, D., & Zinman, J. (2013). Win some lose some? Evidence from a randomized microcredit program placement experiment by Compartamos Banco (No. w19119). National Bureau of Economic Research.

Armendáriz de Aghion, B., & Morduch, J. (2005). The Economics of Microfinance MIT Press. Cambridge, Massachusetts.

Armendáriz, B., & Morduch, J. (2010). The economics of microfinance. MIT press.

Avais, M. (2014). Financial innovation and poverty reduction. International Journal of Scientific and Research Publications, 4(1), 2250-3153.

Babbie (2008). The Basics of Social Research. Belmont CA: Thomson Wadsworth.

Bansal, S., & Singh, A. K. (2019). Examining the social and entrepreneurial development of women through Microfinance in Indian context. Journal of Management Development. DOI 10.1108/JMD-05-2019-0146.

Caskey, J. P., Duran, C. R., & Solo, T. M. (2006). The urban unbanked in Mexico and the United States. The World Bank.

Chakrabarty, K. C. (2011). Banking and beyond: new challenges before Indian financial system. RBI Monthly Bulletin April.

Chibango, C. (2014). Revolution Mobile Money: An Opportunity for Financial Inclusion in Africa. The International Journal of Humanities &Social Studies 2, 59, 67.

Davis, M. (2002): Late Victorian Holocausts: El Niño Famines and the Making of the Third World, Verso, London, pp. 529.

Divya, K. (2014). Banks on wheels for financial inclusion: a case study. International Journal of Research in Computer Applications and Management, 4(9), 36-40.

Erenstein, O. (2011). Livelihood assets as a multidimensional inverse proxy for poverty: a district‐level analysis of the Indian Indo‐Gangetic Plains. Journal of Human Development and Capabilities, 12(2), 283-302.

Financial Express (2019): Around 22% Indians live below poverty line; Chhattisgarh, Jharkhand fare worst, Sep 21, 2019,

Ganlea, John, Kuumuori, Kwadwo Afriyie, & Alexander Yao Segbefia. (2015). Microcredit: Empowerment and disempowerment of rural women in Ghana, World Development, 3, 35–45.

Garikipati, S., Agier, I., Guérin, I., & Szafarz, A. (2017). The cost of empowerment: multiple sources of women’s debt in rural India. The

Journal of Development Studies, 53(5), 700-722.

Ghalib, A. K., Malki, I., & Imai, K. S. (2015). Microfinance and household poverty reduction: Empirical evidence from rural Pakistan. Oxford Development Studies, 43(1), 84-104.

Godinho, V., Eccles, K., & Thomas, L. (2018). Beyond Access: The role of microfinance in enabling financial empowerment and wellbeing for Indigenous clients: lessons from remote Australia. Third Sector Review, 24(2), 57-76.

Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (2008). Multivariate Data Analysis (6th Eds) Pearson Prentice Hall. New Jersey.

Hassan, S. M., & Islam, M. M. (2019). The socio-economic impact of microfinance on the poor family: A study from Bangladesh. Journal of Asian and African Studies, 54(1), 3-19.

IBEF (2020): Indian Rural Market: Brief Overview, available November 30, 2020,

Imai, K. S., & Azam, M. S. (2012). Does microfinance reduce poverty in Bangladesh? New evidence from household panel data. Journal of Development studies, 48(5), 633-653.

Imai, K. S., Gaiha, R., Thapa, G., & Annim, S. K. (2012). Microfinance and poverty—a macro perspective. World development, 40(8), 1675-1689.

Isangula, K. (2012). Improving women and family’s health through integrated microfinance, health education and promotion in rural areas. Journal of sustainable development, 5(5), 76.

Jayakumari, A. G. (2015). Financial inclusion: an Indian outlook. Research Journal of Social Science & Management, 4(11), 1-5.

Jose, S., & Chacko, J. (2017). Sustainable development of microfinance customers: An empirical investigation based on India. Journal of Enterprise Information Management. 30 (1). 55-65.

Jyothi, P., & Savitha, B. (2013). Delivery of microcredit to self help groups by regional rural banks in Andhra Pradesh. Research Journal of Social Science & Management, 3(6), 128-134.

Khandker, S. R. (2005). Microfinance and poverty: Evidence using panel data from Bangladesh. The world bank economic review, 19(2), 263-286.

Lakshmi, P., & Visalakshmi, S. (2013). Impact of cooperatives in financial inclusion & comprehensive development. Journal of Finance and Economics, 1(3), 49-53.

Lal, T. (2018). Impact of financial inclusion on poverty alleviation through cooperative banks. International Journal of Social Economics. 45(5), 808-828.

McIntosh, C., Villaran, G., & Wydick, B. (2011). Microfinance and home improvement: using retrospective panel data to measure program effects on fundamental events. World Development, 39(6), 922-937.

Morris, G., & Barnes, C. (2005). An assessment of the impact of microfinance: a case study from Uganda. Journal of Microfinance/ESR Review, 7(1), 4.

Rehman, H., Moazzam, D. A., & Ansari, N. (2020). Role of microfinance institutions in women empowerment: A case study of Akhuwat, Pakistan. South Asian Studies, 30(1).

Roodman, D., & Morduch, J. (2014). The impact of microcredit on the poor in Bangladesh: Revisiting the evidence. Journal of Development Studies, 50(4), 583-604.

Samer, S., Majid, I., Rizal, S., Muhamad, M. R., & Rashid, N. (2015). The impact of microfinance on poverty reduction: Empirical evidence from Malaysian perspective. Procedia-Social and Behavioral Sciences, 195, 721-728.

Shirazi, N. S. (2012). Targeting and socio-economic impact of microfinance: A case study of Pakistan. Islamic Economic Studies, 20(2).

Ukanwa, I., Xiong, L., & Anderson, A. (2018). Experiencing microfinance: Effects on poor women entrepreneurs’ livelihood strategies. Journal of Small Business and Enterprise Development, 25 (3), 428-446.

Ul-Hameed, W., Mohammad, H., & Shahar, H. (2018). Retracted: Microfinance institute’s non-financial services and women-empowerment: The role of vulnerability. Management Science Letters, 8(10), 1103-1116.

Van Rooyen, C., Stewart, R., & De Wet, T. (2012). The impact of microfinance in sub-Saharan Africa: a systematic review of the evidence. World Development, 40(11), 2249-2262.

Weber, O., & Ahmad, A. (2014). Empowerment through microfinance: The relation between loan cycle and level of empowerment. World Development, 62, 75-87.

World Bank (2001): Attacking poverty. World development report, 2000/2001, World Bank, Washington, DC.

Wun, N. S. L. P., Nusari, M., & Ameen, A. (2019). Effect of microfinance on socio-economic development of rural community in Myanmar. International Journal of Management and Human Science (IJMHS), 3(3), 26-31.

Copyright (c) 2022 Zahoor Ahmad Parray, Shabir Ahmad Bhat, Raouf Ahmad Ahmad Rather, Pirzada Sajad Ahmad

International Research Journal of Business Studies has been covered by the following services:

Image result for university of Saskatchewan small logo