Investigating the Effect of Amanah Ikhtiar Malaysia’s Microcredit Program on Their Clients Quality of Life in Rural Malaysia

Abstract

The objective of this study is to examine the impact of Amanah Ikhtiar Malaysia's (AIM) microcredit program on their poor client's quality of life in rural Malaysia. AIM provides small scale financial services and training to poor and hardcore poor households in order to improve their socio-economic condition. This study employed a cross-sectional design with stratified random sampling method to examine whether participation in AIM's microfinance programs improves poor rural households quality of life. A quality of life index using eleven selected indicators was developed. Findings of this study extend the literature by providing empirical evidence that access to microfinance improved quality of life of the poor rural households in Malaysia. The findings show that respondent's participation status is associated with the size and quality of their houses. AIM should therefore focus on increasing the outreach as well as review and re-organize their programs in order to offer a dynamic and well-diversified microfinance program to fulfill all financial needs of their poor clients in rural areas.