Date of Award


Document Type

Open Access Dissertation

Degree Name

Doctor of Philosophy (PhD)


Public Policy

First Advisor

Christian E. Weller

Second Advisor

Donna H. Friedman

Third Advisor

Craig N. Murphy


In just 30 years microfinance has transformed from a credit-based rural development scheme that has claimed to reduce poverty and empower poor women, to a $70 billion financial industry. In the process, the traditional NGO-led model has given way to commercialized institutions, resulting in an increased emphasis on profitmaking. This has also led to confusion in the sector around its mission: is it to alleviate poverty and empower poor women or simply to provide the "unbanked" with access to formal sources of finance? This research considers the main debates in microfinance with regard to its mission and presents empirical evidence on the effectiveness of microfinance.

The study is based on the Pakistani microfinance sector, which provides an ideal opportunity for a comparative analysis of two distinct models of microfinance - the nonprofit microfinance institutions (MFI) and the microfinance banks (MFB). The research compares the depth of outreach, mission, practice, and borrower experiences of MFIs and MFBs, employing a political economy framework. The data includes 140 interviews with policymakers, donors, senior, mid and low-level microfinance officers, and their clients; as well as observations of practitioner-client interactions, including the process of disbursement and collection, group meetings, and field visits with loan officers in urban Pakistan. It also comprises two district-level surveys: the microfinance outreach survey from the Pakistan Microfinance Network (PMN) and the Government of Pakistan's Social and Living Standards Survey (PSLM). The surveys are analyzed econometrically to test whether district-level socioeconomic differences affect patterns of outreach.

This study broadens our understanding of the extent to which the local political economy shapes the outcomes of a market-based intervention, such as microfinance. It also provides an insight into the evolution of microfinance, specifically as framed by the global development discourse and subsequent public policy choices. Finally, the study provides an authoritative account of how institutional structure affects microfinance's effectiveness as a tool for poverty alleviation, empowerment and financial access.