ROLE OF MICROFINANCE IN POVERTY ALLEVIATION IN RURAL AREAS OF DISTRICT SARGODHA, PAKISTAN

Ahmed Raza CHEEMA* and Rajinder PARKASH**

This study, calculate the headcount ratio and analyze the impact of microfinance issued by the Punjab Rural Support Programme (PRSP), using the Multiple Ordinary Least Squares (OLS) regression in rural areas of district Sargodha, Pakistan. The results depict that in pre-microfinancing activities the headcount ratio was 56.7 per cent, but after receiving the microfinance it reduced to 14.1 per cent. The results of OLS regression shows that microfinance plays an important role in poverty reduction, and that poverty is inversely related to a number of earners and the level of education; whereas it is positively associated with the household size. At policy level, it is suggested that microfinance should be provided to poor households at the least interest rate. The government should also manage maximum education and the job opportunities, especially for the poor class. It should also focus on family planning awareness to control households’ size, especially among the poor.