Impact of microfinance on household income: special reference to Kopay DS division in Jaffna district

Abstract

Micro Finance Institutions (MFI) play a vital role in providing financial and non-financial services to poor in developing countries. They focus on micro credit, savings, insurance, and other financial and non-financial services to the low-income people of a country. More than thirteen (13) million micro entrepreneurs worldwide have benefited through microcredit, by using the credit facilities in order to improve their wealth and their families out of poverty (Rathiranee and Semasinghe, 2015).

Microfinance is not a new concept as it has been existed since the 18th century. However, the first organization to receive a greater attention was the Grameen Bank in Bangladesh, which was started in 1976 by Muhammad Yunus. In Sri Lanka, there are variety of MFI providing financial and non-financial services for poor people. According to Yogendrarajah (2014) and Premaratne (2009), such services are provided by licensed commercial banks, licensed specialized banks, registered finance companies, cooperatives, and NGOs. The study attempts to investigate whether the micro finance impacts on household income level in the Kopay DS division of the Jaffna district. Income level of the people will be measured by the extent of increase or decrease in earnings or profit, saving, consumption of the people. This study will help to assess the contribution of MFI to uplift the poor people particularly in a war affected area. Findings of this study may help to accelerate effectiveness and efficiency of micro finance and also to provide useful insights to policy makers in adopting their policies related to microfinance.