Abstract:
The prevalence of poverty has been a common phenomenon in Ethiopia. Microfinance has been
introduced and currently it is being practiced in the country as a tool to deliver financial service to
the poor with the objective of reducing poverty and improve household livelihood. This research
examines effect of microfinance institution in enhancing living standards of beneficiaries. The study
uses cross-sectional data collected from the Busa Gonofa microfinance of Ginchi branch households
to derive the empirical evidence. Standard deviation and inferential statistical methods like
correlation was used for identify the impacts of microfinance intervention on improving the living
standard of poor household in comparing client and non-client household. In this scenario, this
research found that credit has a significant and positive impacts on household average yearly
income, consumption, Education, health care, employment generations and housing condition in
comparing with non-client respondents. These findings confirm that credit provided for rural
household is an effective policy tool to reduce poverty.
Therefore, strengthening the existing operation of microfinance in the Busa Gonofa micro finance of
Ginchi would be appropriate socio-economic policy.
