Dr Pokhrel hypothesized that microcredit is a sustainable tool for poverty reduction, based on the idea that access to microcredit can improve household income and employment opportunities, thus leading to increases in household consumption and asset ownership. The study employed data from 7,020 Nepalese households, sourced from the Nepal Central Bureau of Statistics.
The analysis indicated that microcredit participants experience higher levels of household consumption of both food and non-food items than do non-borrowers. Likewise, ownership of assets was positively associated with household access to microcredit. Microfinance borrowers exhibited higher levels of asset ownership across all three categories – livestock, transportation and appliances – than did non-participating households.
In conclusion, the author argued that microcredit has a role to play in poverty reduction in Nepal. However, the report emphasized that for microcredit to be more effective in poverty reduction, policymakers must: (1) set clear objectives for various economic empowerment indicators; and (2) create a policy framework, with an emphasis on improving financial literacy through public and private sector partnerships, to spur small enterprise growth, particularly in the rural economy.
This is a summary of a paper by Shalik Ram Pokhrel; published in the International Journal of Applied Research in Management and Economics; March 2023; 18 pages; available at https://dpublication.com/journal/IJARME/article/view/978.
By Vaughn Rajah, Research Associate
Additional Resources
International Journal of Applied Research in Management and Economics homepage
https://dpublication.com/journal/IJARME/
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