Microfinance: A way of empowering society


Microfinance programmes are currently being promoted as a key strategy for simultaneously addressing both poverty alleviation and women's empowerment. Where financial service provision leads to the setting up or expansion of micro-enterprises there are a range of potential impact


Although the exact location and date of the first microfinance effort has yet to be determined, scholars attribute the modern microcredit movement to the work of the Grameen Bank and Accion International. Both organizations developed independently of one another, but share a number of common characteristics. The Grameen Bank was founded by Muhammad Yunus in the early 1970s in Bangladesh (Jolis, 1996). At the time, traditional banks were not interested in loaning money to poor people, who were considered poor repayment risks. Yunus' first loan consisted of $27 of his own money, which he lent to 42 individuals. Consequently, he discovered that very small loans could make a significant difference in a poor person's ability to survive, and the Grameen Bank was founded. Over the last thirty years, the Grameen Bank has issued more than $5 billion in loans to several million borrowers - at the close of 2005 the number of outstanding loans totals more than 4 million. To ensure repayment, the bank uses a system of "solidarity groups": small informal groups, nearly all of them exclusively female, that meet weekly in their villages to conduct business with representatives of the bank, and who support one another's efforts at economic self-advancement. As it has grown, the Grameen Bank has also developed other systems of alternate credit that serve the poor

Institution offering Microfinance in Pakistan

  1. ADBP (Agricultural Development Bank of Pakistan)
  2. AKRSP (Aga Khan Rural Support Programme)
  3. Baluchistan Rural Suport Programme
  4. BUSTI (Basic Urban Services for Kacchi Abdies)
  5. Central Directorate of National Savings
  6. Fellowship of the Least Coin
  7. Orangi Pilot Project
  8. Sindh Rural Workers Cooperative Organization
  9. SRSC (Sarhad Rural Support Corporation)

In my dissertation I would like to undertake the first two Institutes ADBP (Agricultural Development Bank of Pakistan) and AKRSP (Aga khan Rural Support Programme).

History about AKRSP

Historically, in 1970s Agricultural Development Bank of Pakistan (ADBP) later named as Zarai Taraqiati Bank Limited (ZTBL) was established to extend subsidized rural credit to the rural farmers. Over the years both the outreach and financial performance of the bank has not remained satisfactory and is currently undergoing a restructuring process.

In 1980s two microfinance institutions namely the Agha Khan Rural Support Programme(AKRSP), later graduated as First Micro Finance Bank (FMFB), and the Orangi Pilot Project (OPP) were set up with a social objective of alleviating poverty by providing credit to the poor. The services of AKRSP were focused in Northern areas and Chitral, whereas the OPP provided financial help to the urban poor of Karachi. Later on, the success of AKRSP led to the introduction of Rural Support Programs (RSPs) at the national level. These RSPs placed a strong emphasis on helping the poor through subsidized credit and other social services as part of their poverty reduction strategy. Besides these institutions, specialized and multi purpose microfinance institutions (MFIs) and NGOs also extended microfinance services to the poor segment of the population with a missionary objective

Objectives of the Research

In order to the aim for which this research is being undertaken, following objectives need to be accomplished which will lead to provide us the clear view how effective and proper performance management system will help management to achieve the goals of Microfinance in the dynamic business environment.

The objectives of the research are:

  • Does Access to Credit Automatically Leads to Empowerment?
  • To provide access to Microfinance to every possible women in poor society of Pakistan and identification of issues and problem is this objective.
  • Current problem with AKRSP (Aga khan rural support programme) in providing Microfinance.
  • To conduct a primary research based on oral interviews, questionnaires and observation in order to come up with innovative ideas to improve performance of AKRSP related to Microfinance.
  • To introduce new measures and techniques to overcome current problem in Microfinance.
  • To implement control tool in order to reduce falsely claimed or misuse of finance.

Research Questions

Subsequent research questions had arisen from the above findings and will be answered in my dissertation.

  • What is the role of AKRSP in providing microfinance?
  • How effectively is microfinance used by the society if provided?
  • What is the impact of Microfinance to women in poor society of Pakistan?
  • What are the differences on lending Microfinance to society by AKRSP and other institution in Pakistan

Significance of the study

This research will help the microfinance institutions in Pakistan to overcome the current problem of providing finance to women and innovative ways to develop the future prospects and wealthy society of Pakistan.

It will also help me in my future prospect and professional career

Critical review of the Literature

A clear justification of the ideas will be put forward by referencing them correctly; and clear distinction between the facts and opinion will be made throughout my dissertation.

Literature Sources Available

Primary Sources Available

  • Questionnaires
  • Oral Interviews.
  • Observation of Queues. (5 different branches.)

Secondary Source:

  • Books
  • Journals.
  • News Papers.
  • Government Publications

Tertiary Source Available

  • Encyclopedia
  • Catalogues etc.

Finding the information in the digital age

  1. Libraries
  2. Libraries provide a gateway to all kinds of information. Library provides access to information. Librarians help to develop strategies for finding and using the most appropriate information for research.

    For an academic paper, one should use books and articles as well as websites that collect information important to the topic. One might also include documentary films, Current news programs, Lectures and even examples of art and film.

  3. Internet
  4. Internet is the vast store house of information located at different places. In fact, the internet is much more than a vehicle for retrieving information.

    Internet allows storing and uploading information of any kind.

    As a student one should take care that information which is access is referenced properly accordingly with the date.

Research Methodology Overview

Research Methods.

The methodology is described in details in the following sections

Description of the methodology

Each of the techniques employed in the research methods are described to explain their purpose and application to the study. Techniques are listed as steps in the order they are conducted, as described in the flow diagram

  1. Initial Theoretical Model.
  2. Prior conducting the research in Microfinance an initial theoretical model will be developed. This model is an integration of ideas and constructions generated during pre-research. This model served as the basis for testing process and values concept during the inductive phase of research.

  3. Literature review.
  4. The initial research activity reviewed the literature and developed research questions. The literature review spanned the body of journals, abstracts, relevant book sections, and references from articles across the works of Financial Institutions, Finance, Share Market reports, Financial Times Magazines etc. The initial research questions were drawn from exploring the research in personal and organizational values conflicts in the system development throughout these literatures. A details plan will developed before defining the research question and sequences of questions for interviews. Peers and faculty reviewed each round for applicability, unbiased presentation and Independent contribution to the research question

    A review of literature about the microfinance sector in Pakistan reveals that interest in assessing the performance of microfinance sector is relatively new and most of the studies were initially conducted to assess the impact of microfinance on poverty reduction. Majority of the studies in this area were undertaken in the decade of 2000 mostly by the microfinance institutions like AKRSP, Kashf, NRSP, Orangi Pilot Project and the Pakistan Poverty Alleviation Programme. A few studies and surveys were also conducted by Pakistan Institute of Development Economics, State Bank of Pakistan and the Applied Economic Research Centre. Initially most of the studies examined growth of microfinance by developing proxy measures of outreach and repayment of loans. Such an approach is based on the assumption that if outreach in terms of number of borrowers was increasing and loan repayments were made by the borrowers then microfinance sector was performing successfully (Khandker, 1999).

  5. Literature case analysis.
  6. Through the research process I will have to identify several case studies of the business through the literature review, drawing from journals in the areas of business and organizational studies. Case studies will be evaluated and interpreted. A cross-case analysis will be conducted on these case studies. Specifically focusing on values issues in Banks performance process

  7. Case-based model development
  8. Based on the case study analysis, the initial values framework for organizations performance will be designed. Values issues, specific values dimensions, and their relationships to organizations and individual behavior were organized into a framework and analyzed for general consistency, applicability, and relevance to the data collection materials. This framework, with the research questions, will used in preparing the interview guide.

    The interview guide will develop from the combined initial research, using the research questions developed in the literature review, and supplemented by the values framework developed in the analysis of research models. An initial interview guide will be designed, and subsequently reviewed

  9. Data collection
  10. Data are fact, figures, enumerations and other materials, past and present serving as basis for study and analysis; they are raw information or material for analysis purposes and its provides basis for testing hypothesis developing scales and tables.

There are two types of data

  1. Primary.
  2. Primary data can be collected by asking people orally, I will be designing questionnaires to Interview staff of Microfinance or In depth interview, Case study, Observation and experimentation etc.

  3. Secondary.
  4. Different methods are used in collection of Secondary data known as

    • Meta Analysis (An analysis of several Analyses)

    A way of extracting meaningful statistical information / data from lots of small studies trials.

    • Historical Method.

    Historical method deals with the evidence in order to establish the facts and draw conclusion about past events.

    It attempts to test the truthfulness of the reports of observation made by others

    • Content Analysis.

    A quantitative analysis of contents of written documents, i.e a multipurpose research method meant specially for investigating a broad spectrum of problems in which the content of communication serve as a basis of interference.

    It transforms verbal, non-quantitative document into quantitative data.

    The data will be collected from the financial Institutions using questionnaires and printed journals and published accounts of the company and a details study of Financial Institutions will also be made for this purpose.

    In the Research of "Microfinance" both the method will be put to use For collection of data.

Research Approaches

In a research process one uses one of the two broad methods of reasoning

Deductive and Inductive Approaches.

Before using or directly mentioning any approach I would like to make a brief Understanding of what does these two approaches means.


Deductive reasoning works from more general to more specific. It is a step by step process of drawing conclusion based on previously known facts It is formally called as "Top-down" approach. We might begin with thinking a theory about our topic of interest. We then narrow that down to more specific hypothesis that we can test. We narrow down even further when we collect observations to address the hypothesis. This ultimately leads us to be able to test the hypothesis with specific data - a confirmation of our original theories.

Inductive Reasoning

Inductive reasoning works the other way, moving from specific observations to broader generalizations and theories. Informally, we sometimes call this a "bottom up" approach (please note that it's "bottom up" and not "bottom up" which is the kind of thing the bartender says to customers when he's trying to close for the night!). In inductive reasoning, we begin with specific observations and measures, begin to detect patterns and regularities, formulate some tentative hypotheses that we can explore, and finally end up developing some general conclusions or theories.

I would like to prefer a deductive approach in my research because I feel it as a systematic approach based on previously known facts.

Use of Quantitative or Qualitative methods

The selection of which research approach is appropriate in a given study should be based upon the problem of interest, resource available, the skills and training of the researcher and the purpose of the research study. Although some of the research may incorporate both quantitative and qualitative methodologies, In the pure form there are significant differences in the assumption underlying these approaches, as well as in the data collection and analysis procedure use.

Quantitative research is generally approached using scientific methods, which includes

  • The generation of models, theories and hypotheses
  • The development of instruments and methods for measurement
  • Experimental control and manipulation of variables
  • Collection of empirical data
  • Modeling and analysis of data
  • Evaluation of results

Qualitative researchers typically rely on four observations

  • Participation in the setting.
  • Direct observation
  • In depth interviews and
  • Analysis of documents and materials

In my dissertation I will prefer to use a mix of both Quantitative as well and Qualitative research methods.

Report writing and Submission of the Report


The report will be prepare in the manner which is proposed by the university if not then it will be made as per the layout suggested by the London College of Business.

It may include (Type of Paper, Headings Footings, Standardized form etc)


It will include only the matter related with the subject and length will be specific as per the limit set by the university.

The actual writing of the report.

The information collected will be arranged in the logical taking care of the structure.

Case studies, research process, and methodologies will be arranged systematic.

The report will be prepared in keeping in mind the following facts.

  • It will answer the question raised by the proposal
  • The structure will be well balanced and logical.
  • Pages will be numbered and it will be indexed.
  • It will be shown to Professor before submitting it , in order to get a feedback.

The different parts of the report will be.

  1. Title Page
  2. This will include

    • The title of the report
    • The sub-title(If necessary)
    • The name of the author, College and University.
    • The date of the submission of the report.
  3. The Index (Table of Contents)
  4. Executive Summary
  5. The executive summary will reveal the most important points or parts covered by the Dissertation

  6. The Main text of the report
  7. The main text is commonly divided into the following chapters.

    • Introduction
    • Clarification of the problem statement
    • Methodology (Description of how the information was obtained)
    • Recommendations.
    • Annexes (For e.g Bibliography)

    Detailed explanation, Examples, drawing, statistic techniques etc will be put to use.

Research Time Line

Limitation of the research

The research design section has described the pros and cons of every technique adapted from sampling to focus groups, however utmost care will be taken place to minimize the impact. Other limitations which I may come across with my dissertation are:

  1. Time Limit - As seen from the above time scale, I have only six months to conduct this research; I need to try my best to solve the above research problem.
  2. Lack of Access - It may be difficult to obtain appropriate financial and non-financial information of the Institution due to limitation of the access.
  3. Confidential Information - It may not be possible for all the staff to disclose confidential information of the Institution to me, I need to go through the published Journals and articles of the Institution.


  1. Catherine Dawson, 2007, "A Practical Guide to Research Methods", 3rd Edition, How to Books Limited.
  2. AKDN, Agakhan agency for Microfinance, last updated at 08:36 GMT, Thursday, 6 November 20, Date Accessed : 2nd April 2010, Available at " http://www.akdn.org/akam"
  3. Federic S. Mishkin & Stanley G. Eakins, 2008. Financial Market and Institutions, 6th Edition Pretence Hall New York.
  4. Ackerley, B. (1995). "Testing the Tools of Development: Credit Programs, Loan Involvement and Women's Empowerment." World Development 26(3): 56-68.
  5. Wright, Graham A. N., et al. "Vulnerability, Risks, Assets and Empowerment—The Impact of Microfinance on Poverty Alleviation." Paper contributed to World Development Report 2001.
  6. Yawe, Agnes. "Engendering Microfinance Services: Beyond Access." Paper presented at the Women's Empowerment or Feminisation of Debt? workshop in London, March 2002. Available at "www.oneworldaction.org."
  7. Zafar, Roshaneh. "Microfinance and the Empowerment of Women: The Experience of Kashf Foundation, Pakistan." Paper presented at the Microcredit Summit, Meeting of Councils, New Delhi, India, 1-5 February 2001

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