Impact of micro finance on poverty alleviation: special reference to J/111 Gramma Niladhari division

Abstract

Micro finance program extends small loans to very poor people for self-employment projects, that to care for themselves and for their families. Micro finance can thus play an effective role in extending the reach of credit in rural areas, Micro finance facilities enable an entrepreneur to build a business or expand existing business and create a better change in their lives. Microfinance Institutions (MFIs) give the opportunity for the people who are living under the poverty lines by granting loan for investment purposes and somehow by providing their management expertise. The main objective of this study is to identity the how the micro finance activities effect on the people living standard. 168 Micro finance beneficiaries randomly selected in J/111 GS division. Data were analyzed across different statistical tests through SPSS Software. The finding of this study shows that micro finance increases saving and consumption activities of beneficiaries. The results of regression analysis shows coefficients of loan amount is 0.562 with the p value of 0.001. It indicates that loan amount has statistically positive impact on alleviating poverty among micro finance loan holders in research area. According to the correlation analysis, it shows strong positive correlation between micro finance and saving and consumption activities with the coefficients of 0.73 (p = 0.000). Further, The R2 value of the regression model is 0.59 which means that approximately 59% saving and consumption activities are implied by the micro finance. Thus, this study concluded that micro finance programme is a better tool for poverty alleviation strategy.