Abstract:
Microfinance institutions play a crucial role in enhancing household livelihoods, particularly in less developed countries where access to traditional financial services is limited. The objective of this study was to explore the Effect of microfinance institutions on poverty alleviation and economic empowerment at the household level in Holeta town. Data were collected from 32 samples of household clients of three selected institutions in the west Shewa zone Holeta area through in-depth observations. This study is based on a qualitative research approach with a narrative research design. This approach allows for in-depth exploration and understanding of the household experiences, perspectives, and stories of individuals involved. the study finds that microfinance services can be an effective tool for poverty reduction and economic development, but that they must be carefully designed and implemented to meet the needs of low-income households. Specifically, the study illustrates that microfinance institutions prioritize financial literacy training, flexible loan products, and client-centered approaches to improve the effectiveness of their services. This study contributes to a deeper understanding of the potential of microfinance services to improve household well-being in developing countries, and recommending the need for careful consideration of the social and economic context in which the services have been delivered
