Empowering Lives : Evaluating the Role of Microfinance Institutions in Poverty Alleviation across South Asia

Abstract

This study investigates the intricate dynamics among small and medium-sized businesses (SMEs), microfinance institutions (MFIs), agricultural growth, and poverty reduction in four South Asian countries—Bangladesh, India, Pakistan, and Sri Lanka. Employing a panel data fixed-effects regression model, our analysis reveals compelling insights. SME growth emerges as a robust contributor to poverty reduction, emphasizing the need for supportive policies fostering entrepreneurship and access to financing. Surprisingly, MFIs exhibit a statistically significant negative correlation with poverty, prompting further exploration into loan procedures and outreach strategies. Additionally, the expansion of agriculture proves pivotal in poverty alleviation, underscoring the importance of investments in rural technology and infrastructure. The findings highlight the nuanced challenges and opportunities for comprehensive poverty reduction strategies in South Asia.