Abstract:
Purpose: Observing the borrowing trend in the SMEs (Small Medium Enterprises) and the house hold businesses, it is seen that small borrowing is increasing with the time. People are getting familiar with micro financing. Another point that pops up is that if these microfinance activities from banks are really helping in reduction of poverty in Karachi? Thus, this study aims to seek the aspects that if Microfinance activities are helping in reduction of poverty in Karachi.
Methodology/sample: The researcher opted for both quantitative and qualitative research where a self-administered questionnaire was used to collect the data from 70 respondents that belonged to various areas of Karachi. The data gathered from the questionnaires was analyzed using SPSS.
Findings: Pearson correlation was used to test the relationship between the dependent and independent variables on secondary data. An inverse relation was found between the independent variable (poverty head count ratio) and the dependent variable (borrowing from micro finance bank). In addition, Pearson correlation was also applied on primary data i.e. taken from survey and also come to the point that there is positive role of microfinance sector in poverty alleviation.
Practical implications: the study made by the researcher can be used to implant different devised strategies to boost the micro financing activities all over Karachi. Moreover a financial institution can find a great help from this research during the introduction of new product or services as this study identifies many countryside areas of the city where activities needs to be groomed further. This study can also help to educate the end users of products^ which can be of great help for them to understand that how micro financing can help them in flourishing their businesses. Furthermore, consumer will also get to know how to take loan from a institution and bank and what are the differences between different products and services of different banks and
institutions.
