Impact of credit-plus approach of microfinance on income generation of households

This paper examines the impact of the credit-plus approach of microfinance on household income-poverty. A multistage random sampling method was used to select a cross – institutional sample of 268 households from the Kandy District of Sri Lanka. Two leading microfinance institutions in Sri Lanka, namely, Thrift and Credit Cooperative Societies (TCCSs) and Sarvodaya Economic Enterprise Development Services (Guarantee) Limited (SEEDS), were selected for the purpose. To understand the impact of microfinance on income generation of households and to examine the effect creditplus services have on the amount of cumulative credit received by households, three regression models were estimated. The study revealed a positive impact of microfinance in increasing income, thereby reducing poverty in households. Credit-plus services were found to have made a higher positive impact on the households that had taken more credit than the average household indicating that greater the credit provided by credit-plus services, the higher the potential for households to generate income.