Determination of Credit Programme Participation and Socioeconomic Characteristics of Beneficiaries:Evidence from Sargodha

In Pakistan about 65 percent population live in rural areas. The rural credit markets are segmented and imperfect. Micro -credit is considered as a valuable technique to deal with imperfections of credit markets. In this study, we analysed rural credit market of District Sargodha, Pakistan to study the socio economic characteristics of the beneficiaries and identify the determinants of participation in credit programme in the year 2004-2005. To analyse characteristic the descriptive analysis was used. For identifying the factors affecting household access to credit and participation in programme, a binary Logistic regression model was employed. Results of both analyses showed that at household level, participation in credit programme was significantly related to household characteristics, where participants were indifferent to increase in rate of interest. More than 80 percent loan came from informal sector but the probability of participation significantly increased if there existed any formal financial institution.

Determination of Credit Programme Participation and Socioeconomic Characteristics of Beneficiaries: Evidence from Sargodha

International literature asserts that “micro-finance” began alleviating poverty several decades ago when organisation in Latin America, Bangladesh, and other developing nations started testing the notions of lending small amounts to impoverished people (mostly women). Professor Mohammad Younis1 of Bangladesh and his Grameen Bank brought it on to the world stage and showed how effectively it could be used to change lives. Giving loans of as little as five dollars, Grameen brought millions in to the micro credit net and in doing so lifted people, particularly the rural poor, out of abject poverty [Ayesha (2007)]. By 1980, the success of such institutions prompted many NGO’s and International Organisations to provide micro-finance services