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Microfinance Intervention and Socio-Economic Transformation: An Application of Propensity Score Matching and Difference-in-Difference Technique
25 Jun 2010, Lyngdoh, B. & Pati, A.

Does microfinance intervention result in socio-economic transformation?

This study examines the impact of microfinance intervention on socio-economic transformation by using two contemporary techniques, namely, Propensity Score Matching and Difference-in-Difference.

The study is based on primary data collected from 150 women microfinance clients and 75 non-microfinance clients in the state of Meghalaya, as well as secondary data from international publications. It highlights the chain effect of socio-economic transformation through microfinance intervention by identifying differences between periods before and after the intervention. Key findings of the study include:

Microfinance significantly transforms the economic status of clients;
Significant correlations exist between health status and savings, access to social amenities and mobility, and capacity building and mobility;
Income does not impact decisions regarding education;
Economic variables do not affect mobility and capacity building.

The study recommends implementation of microfinance intervention on a large scale for greater impact on rural population. It concludes that proper strategizing and implementation at all stages can ensure the emergence of microfinance as a critical tool for poverty alleviation and socio-economic transformation.

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Publisher(s):
Social Science Research Network