Impact of micro finance on poverty alleviation in Batticaloa District

Abstract

The major aim of the research paper was to explore the impact of microfinance on poverty alleviation in the Batticaloa district. The research question developed for this study was what is the impact of microfinance on poverty alleviation of Samurdhi beneficiaries in Batticaloa district? There are many microfinance institutions, banks, and other institutions that are providing loans to improve the standard of living and to alleviate the poverty level. But, the actual impact of those loans and microfinance activities was not known. To find the actual impact, the above research question was developed. Primary data were collected from people who were Samurdhi beneficiaries and got loan from microfinance institutions or banks or other institutions from Eravurpattu, Koralaipattu. North, Koralaipattu South, Manmunai Southwest, and Porativupattu Divisional Secretariat (DS) Divisions in Batticaloa District. A proportional random sampling method was used to obtain 300 responses from the population. Completed questionnaires were analyzed using SPSS tool package and the collected data were used to test the model using univariate and multiple regression analysis. The result revealed that the development of microfinance, the performance of microfinance, and strategies employed by microfinance significantly impact poverty alleviation in Batticaloa district. Among the strategies employed by the microfinance institutions had a high impact on poverty alleviation. Altogether 64.8% variation was explained by the regression model. In addition to that, it was implied that microfinance activities are at a high level in selected five DS divisions in Batticaloa district. However, the level of poverty alleviation in terms of shelter, disposal of wastages, and health was at a moderate level while other aspects were at a high level. Further, it was concluded that by focusing on and improving the three selected dimensions of microfinance, the microfinance institutions, banks, and other institutions can increase the level of poverty alleviation. More prominence has to be given to increase the strategies employed by microfinance.