An Empirical Investigation on the Evaluation of Performance of Microfinance institutes in Pakistan

Abstract

The concept of “Microfinance” in Pakistan today is being performed with dual aim of socio-economic development of nation i.e., providing better financial opportunities for people living in poverty and a more financially stable and growing sector. Keeping in mind these objectives, this study aims at investigation of the current practices and performance of microfinance institutes in Pakistan including Microfinance Banks (MFBs), Rural Support Programs (RSPs) and other Microfinance institutes (MFIs). With the rising inflation, worse security conditions, economic slowdown due to less local and foreign investments, elite and ethnic polarization , natural disasters and the fact that microfinance industry in is its take off position in Pakistan, it becomes very essential to monitor its performance. This research will be empirical and based on quantitative data of 15 MFIs taken as a sample for measuring performance. The study will employ dynamic panel data model by including sample data for five years (2006-10) to test causal relationship between different performance indicators and hypotheses developed to have a better view to evaluate and comment on the current performance of sector.