Does microfinance reduce poverty? New evidence from Northeastern Mindanao, the Philippines. (February 2017) - Agbola, Frank W.
Abstract: This article focuses on understanding the impact of microfinance on poverty reduction and wellbeing measures of health, education and living standards in Northeastern Mindanao, the Philippines. We employ a mixed method approach involving a survey of 211 microfinance client and non-client households. We find that little over one in five households are multidimensionally poor, with non-client households being poorer than microfinance client households. Our results show that microfinance has had a mildly positive impact on poverty reduction with incomes and savings of microfinance client households being higher than those of non-client households. Based on the impact of microfinance on poverty reduction, we argue that it is important that policymakers implement strategies for promoting and creating greater access to microfinance as this has the capacity to reduce poverty and improve the well-being of the poor and marginalised in the Philippines. Highlights: The empirical evidence of the impact of microfinance on poverty reduction is mixed. We present new empirical evidence for Northeastern Mindanao, the Philippines. We find that one in five households are multidimensionally poor. Microfinance has had a mildly positive impact on poverty reduction through increases in income and savings.