Microfinance and poverty reduction: the case of Northeastern Mindanao, the Philippines

This thesis investigates the impact of microfinance on poverty and other key social wellbeing measures of health, education and women empowerment in Northeastern Mindanao, the Philippines. In the Philippines, poverty remains pervasive with microfinance often times remain the poor’s only access to formal financing. A review of the literature reveal that rigorous empirical studies on microfinance impact remain few, often with mixed outcomes. This suggests a need to further understand the impact of microfinance in the Philippines. To address the objectives of the study, a mixed method was employed. A one-time survey of 211 eligible households involving microfinance clients and non-clients was undertaken in both treatment and control areas. Further, a total of eight focus group discussions (FGDs) involving a random sample of clients who took part in the survey were also undertaken. Finally, a survey of key microfinance industry stakeholders via semi-structured interviews was also undertaken. The stakeholders include key government policymakers and officials, representatives from government and private financial institutions, donors, NGOs and other experts in the field. The quantitative and qualitative data were analysed using Eviews and NVivo, respectively. The study reveals the following: Firstly, a positive and mildly significant impact of microfinance on per capita income. Secondly, the participatory FGDs suggest positive impacts of microfinance on clients’ savings behaviour as well as on some social wellbeing measures of health, education and women empowerment. The Philippine microfinance industry however continues to face some key challenges, including a huge financing gap. This needs to be addressed by policymakers and other stakeholders in order for microfinance to become an effective instrument towards sustainable and more inclusive growth.