Abstract:
Poverty is the curse upon humanity that leads to human suffering and a state
of despair. It has become a huge threat to countries on the margins of
globalization. In the Sri Lankan context, poverty is a fundamental question
confronted by the government since it negatively affects the development
process. The present study has been undertaken to examine the impact of
microcredit on poverty alleviation with the objective of assessing how far
microcredit influences poverty alleviation. The study was conducted with
special reference to the Trincomalee District Secretariat division, which is one
of the rural areas where people are in dire financial strains due to the lack of
developmental initiatives, resulting in the microcredit institutions invading the
area during the last few years. For the study purpose, a sample of 200
microcredit clients was selected using the stratified random sampling
technique. The overall findings of the study revealed that there is a statistically
significant positive relationship (r=0.701**, p<0.05) between the contribution
of microcredit and poverty alleviation. However, interest rate (r=-0.141*) and
accessibility of getting the loan (r=0.172*) have a weak relationship with
poverty alleviation when compared with loan amount and repayment ability.
It was also found that, although loan amount, accessibility of getting loan,
repayment ability and interest rate have a significant influence on Poverty
Alleviation in Trincomalee, the overall microcredit contribution is at a low
level. From the findings of the study, it was suggested that microcredit
institutions in Trincomalee should concentrate mainly on the interest rate and
the accessibility of loans which will lead to much more effective results. This
study can be a base for the studies that are to be extended by considering other
suitable dimensions of microcredit contribution and poverty alleviation, and
also advisable to extend this study by considering other microfinance
institutions in Sri Lanka and other nations too.
