EXPLORING THE NEXUS BETWEEN MICROFINANCE AND POVERTY ALLEVIATION THROUGH MEDIATING ROLE OF MICRO SAVINGS TO ACHIEVE SUSTAINABLE DEVELOPMENT

This paper attempts to evaluate the effects of different microfinance services, such as micro credit (MC), micro saving (MS), non-financial services (NFS), social intermediation services (SIS) and micro insurance (MIN) on poverty reduction (PA). It tries to assess the roles that these financial instruments play in minimizing poverty and enhancing socio-economic status of the underprivileged people. The positivist tool of research chosen, and quantitative data gathered in the form of structured surveys filled in by 248 people who took part in microfinance activities. To conduct the study, the researcher uses the Partial Least Squares Structural Equation Modelling (PLS-SEM) analysis to determine the direct and indirect symptoms of the microfinance services on reducing poverty. The paper evaluates some of the connection between the microfinance services and poverty alleviation whereby special consideration given to the inter-mediatory context of micro savings. The paper determines that micro credit, micro savings, and non-financial services to be instrumental in poverty reduction. Micro credit is the key instrument referred, which allows starting small businesses or improving the existing ones. Although there are less levels of uptake, micro savings demonstrate significant importance of serving the prospect of financial security and vulnerability against shocks. Financial services alone are not sufficient, where training and counselling are non-financial services that help them better the effectiveness of the financial services, particularly, in empowering individuals and community development processes. The study gives policymakers and microfinance institutions (MFIs) guidelines on what to do. Integration of non-financial services into microfinance services forms an addition to the long-lasting effect on the alleviation of poverty. The MFIs advised to make a more holistic approach that integrates the financial products with social support services. The work represents a contribution to microfinance literature by providing an environment in which various microfinance products related to alleviating poverty. Micro savings as a mediating factor is something that researchers have not focused on well enough and this paper fills the above gap providing fresh knowledge on the synergistic functioning of such services.