A Proposed Islamic Microfinance Impact Assessment Methodology

Abstract

Impact assessment of microfinance programs have been remained the foremost concern of microfinance stakeholders for optimal policy measures. The existing literature regarding the impact assessment varies from parametric to experimental methods to evaluate the performance of microfinance programs across the world however; the literature is lacking a single measure to reveal maximum possible changes in socioeconomic variables resulting from microfinance institutions’ intervention. This study aims to develop a composite index for evaluating the performance of microfinance programs in multi-dimensional contexts. The study exposes a set of eight “diverse indicators” to evaluate the performance of a microfinance program on a wider socioeconomic scale. The dimensions of the index are consist of economic (Income, saving) and socioeconomic (poverty, access to basic facilities, family empowerment) indicators. The changes in deprivations of household, based on the selected indicators, reveal the intensity of success of a microfinance program towards their goals. Finally, we have developed an index by the interaction of incidence and intensity of socioeconomic deprivations. The index is named