The Impact of Microfinance on Poverty Reduction: Empirical Evidence from Malaysian Perspective

Microfinance became a buzzword in the credit markets as an effective tool for poverty reduction and socioeconomic development. Yet, the impact still questioned and varies from one country to others and from urban to rural. The aim of this paper was to examine the role of Malaysian microfinance Amanah Ikhtiar Malaysia (AIM) on household income. A cross-sectional survey interviewed 780 from old and new clients in Selangor and Melaka states in Malaysia. The stratified random method was used to collect the data from urban and rural districts. The finding of multinomial logistic reveals that AIM has positive impact on household income of women borrowers who spent three years in the scheme as compared to new borrowers who have not received treatment.