The purpose of the study is to determine whether the funds provided by Islamic microfinance institutions help improve the income of involuntary financially excluded people in Pakistan. We collect data through self-administered questionnaire from the borrowers of four Islamic Microfinance institutions (IMFIs) in various cities of Pakistan. K-modes cluster analysis was performed for borrowers’ segmentation based on certain characteristics. In factor analysis, 4 factors were extracted that represents borrowers background attributes, financing procedural attributes, IMFIs attributes, and demographic attributes. We used these factors as independent variables to perform multinomial logistic regression to observe the impact of these IMFIs on borrowers income. The results suggest that IMFIs in Pakistan help increase income of borrowers in Pakistan. The findings of this study will not only to the of interest to microfinance beneficiaries, service suppliers and researchers but also to the government of Pakistan for regulations and policy decision for poverty reduction
