The Mediating Role of Group Lending Between Poverty and Microfinance


  • Saif-Ul-Mujahid Shah Faculty of Economics & Business, University of Malaysia
  • Mujib Ur Rahman Demonstrator Economics Department, Abdul Wali Khan University Mardan
  • Junaid Athar Khan Assistant Professor Department of Management Sciences, Abdul Wali Khan University Mardan


Microfinance, group lending, individual lending, Structural Equation Modelling


Microfinance has become the main tool of poverty alleviation in the 21st century. The microfinance program in different countries has different lending approaches. The most common in the world is group lending and individual lending. Each lending procedure has its own merits and demerits. The present research is about the evaluation of the mediating role of group lending between microfinance and poverty. In this regard, the study was carried out in district Chitral. The data was collected from two local support organizations using a structured questionnaire. For the purpose of analysis structural equation modeling was used and Smart PLS was used as an analysis tool. The finding of the results shows that the group leaders have a positive role in mediating the relationship between microfinance and poverty and in reducing the moral hazards and proper utilization of funds.