Abstract | This paper analyses survey data from women microfinance clients in rural Pakistan to assess how investing loans in entrepreneurial activities affects household-level outcomes. Using propensity score matching to compare borrowers who use loans for microenterprises versus other purposes, we find that entrepreneurship is associated with significantly higher income, clothing expenditures, poverty scores, and income diversification. However, there are no detectable impacts on spending for health and education or on the incidence of child labour. The results suggest that while microfinance can improve economic welfare for entrepreneurial households, complementary interventions may be needed to enhance human capital investment. We discuss implications for the design of microfinance programs and policies to empower women entrepreneurs in Pakistan. |
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