Assessing the Role of Islamic & Conventional Microfinance Effectiveness on Poverty Alleviation: The Mediating Role of Households’ Socioeconomic Performance

Dr. Sabah Younus; Muhammad Luqman Rehan; Sabir Shabbir; Danish Naseer

doi:10.63056/

Authors

Dr. Sabah Younus Assistant Professor, National University of Modern Languages, Multan Author
Muhammad Luqman Rehan MBA, National University of Modern Languages, Multan Author
Sabir Shabbir MBA, National University of Modern Languages, Multan Author
Danish Naseer MBA, National University of Modern Languages, Multan Author

DOI:

https://doi.org/10.63056/

Keywords:

Microfinance Effectiveness, Poverty reduction, households’ socioeconomic performance, Islamic and traditional microfinance, and a new approach of mediation.

Abstract

Purpose: The main objective of the research is to evaluate the effectiveness of the Islamic and conventional microfinance in enhancing the household socioeconomic performance (HSP) in the context of economic performance, social empowerment, and entrepreneurship, which can alleviate poverty (PA). Also, it considers the impact of microfinance effectiveness (MFE) on household, company, and financial resilience. It further examines the nature of HSP as an intermediary in the association between MFE and PA to facilitate sustainable economic empowerment at the micro level.

Method/Design/Approach: This study used mediating role of HSP to investigate the MFE (Islamic and conventional) on PA by applying cross-sectional research design and quantitative research method. The type of research method is survey research to collect data on beneficiaries in the microfinance sector. The data is analyzed with the help of SPSS & Process Macro with the help of a series of statistical tests. These include tests that ensure validity and strength of the findings and they include regression, correlation, mediation, and dependability. Moreover, the reliability was tested by use of Cronbach Alpha. The data presented by the respondents was as well summarized using descriptive and demographic analysis. ANOVA, paired sample t-tests, regression, and correlation were all used to test the relationship between significant variables.

Findings: This study will be valuable addition to the current literature by providing the statistical evidence of the revolutionary impact of microfinance on poverty alleviation in Islamic and conventional environments and empirical confirmation of the mediating role of HSP.

Research Limitations and Implications: The study provides informative knowledge to policymakers and development practitioners who may want to maximize the effect of microfinance on poverty reduction. The results imply the need to have comprehensive policies that leverage on sustainable financial models to enhance the social economic performance of households.