Impact of Microcredit: A Summary of Evidence from Pakistan

This MicroNOTE summarizes findings from various studies on the impact of microfinance in Pakistan. These studies were commissioned by stakeholders such as the Asian Development Bank, Department for International Development – UK, European Union, and the Pakistan Poverty Alleviation Fund (PPAF).

The studies found strong and consistent evidence of income increase and mixed evidence on consumption, expenditure, and social indicators. There was very little evidence to show that microfinance helps build household or business assets. There was mixed evidence on empowerment. Client perceptions about change were quite strong. Conclusions include:

• Nearly all studies look at the impact of microcredit, but do not investigate the effects of participation in savings or insurance programs;
• Studies should consider the impact of microfinance in Pakistan, instead of just microcredit, because microfinance in Pakistan has moved forward in offering savings and insurance services;
• Timing of an assessment has important implications, with stronger evidence of positive change when the client has been with the program for a longer time;
• This difference is more significant in indicators of social change, empowerment, and asset accumulation;
• Impact studies should interpret results keeping the longitudinal context in view.