Role of micro-credit membership in improving household income in Ilam District, Nepal
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Department of Economics
Abstract
Banks and other financial institutions are providing the services to people especially living
in urban areas but microfinance institutions are providing financial services to women in
rural area to improve their economic situation. Microfinance service is fruitful to those
women who have good business but no collateral in their name. In this context, this study is
focused to find out role of micro-credit membership in improving household income and
analyzes the socio-economic indicators of members and non-member’s status and analyzes
the impact of micro finance membership on income and economic welfare of household in
Ilam Municipality.
Ilam is one of the major districts of province one of Nepal and role of microfinance
has been reported to be effective and successful in this district. So, Ilam Municipality is
selected as a study area of this thesis to validate this information and examine the pathway
of its success. The conceptual framework of this study comprises of a comparison the
micro-credit members and non-member’s status in Ilam Municipality. Data was collected
through household survey by using structured questionnaire. To comparison of member and
non-member, 120 households selected for purposive sampling, among them, 60
microfinance members and 60 non-microfinance members were selected. The collected
data were analyzed by using simple mathematical and statistical tool such as percentage,
tables and t-test analysis as well.
Many characteristics of microfinance members and non-members were similar.
There were no significant differences in wage income, business income, remittance income,
food grain income, outstanding loan borrowed status, and agriculture land between
members and non-members. But, there was statistically significant difference especially in
cash crop income, household income and livestock income. Cash crop income, household
income and livestock incomes were 2.27 times, 1.5 times and 1.83 times higher for
members compared to non-members respectively. This implies that microfinance has
created opportunities for female members to participate in production for the market and
enhanced their income and welfare. This has also empowered them economically.