Microcredit and Economic Welfare: Experience of Poor Rural Households from Pakistan

This research article effort to empirically assess the effect of microcredit on household economic welfare consequences, for example income and consumption in rural Pakistan. The valuation is based on the difference‐in‐difference method that is a progressively popular technique of tackling the selection bias issue in measuring the influences of microcredit. This paper uses a 2‐year panel data set, together with both primary and secondary data gained through a household survey in rural Pakistan. Our empirical outcomes favour the full belief in the literature that participates in microcredit programme helps expand households' economic welfare, for example income and consumption. Despite the positive results on how microcredit has improved the rural households' living status, our outcomes display that the huge majority of the program applicants are non‐poor, which casts roughly uncertainties on the social potential (for example poverty alleviation) of Pakistan's microcredit programs. © 2020 John Wiley & Sons, Ltd.