Paper short abstract:

This paper draws attention to the impact of microcredit on the relatively less explored non-income dimensions of microfinance client's namely their multidimentional poverty and pro-social behaviors and values. We find that microcredit enhances client's wellbeing and pro-social values and behaviors.

Paper long abstract:

microcredit has played a crucial role in improving the lives of poor. Microcredit impact on client's outcomes such as household’s income, assets, health, education and living standard are widely know but relarively less empirical evidence exists about its impact on the non-income dimentions of the wellbeing.This paper fills in this gap. Employing quasi-experimental design, it evaluates the impact of the microcredit program on the subjective and psychological wellbeing of the clients and on their prosocial values and behaviors through comparions among the treatment and conteol groups of borrowers of Akhuwat microfinance organization, a largest microfinance provider in Pakistan. The sample size consists of total 260 borrowers out of which 130 initial clients (i.e. borrowers who have just joined) are conteol group and the other 130 mature borrowers (who are clients since more than three years) comprised of treatment group. Our findings suggest that microcredit intervention has a positive and significant impact on several of the non-income outcomes. Mature clients experience a higher sense of achievement from their business activity as compared to the initial clients. In the dimension of pro-social behavior and perception, the evidence shows that the role of clients is significant in the aspects of financial help to relatives, financial help to neighbors and importance of girls’ education. This reveals that mature clients tend to engage more in the provision of pro-social activities. Further, client's increase in income due to microfinance increases their work satisfaction, external and internal competence.