Examining the Effect of Microcredit on Poverty in Malaysia

This study employs a cross sectional design with stratified random sampling method to examine if the Amanah Ikhtiar Malaysia (AIM)'s microcredit program improves the hardcore poor households' income. This study uses a quasi-experimental approach and selected control and treatment group members from AIM's client's base – new and old clients respectively. It is evident that the AIM's microcredit program increased the household's income and reduced the poverty rate among their hardcore poor clients in Peninsular Malaysia. Findings of the study indicate the effectiveness of microcredit in eradicating poverty. This program should, therefore, focus on diversify their products and services in order to increase outreach, decrease inactive borrowers and dropouts