International Journal of Scientific Research and Engineering Development

Microfinance has emerged as a significant tool in development economics, aimed at alleviating poverty by providing financial services to low-income populations who lack access to traditional banking systems. This research examines the role of microfinance institutions (MFIs) in enhancing income generation, promoting entrepreneurship, and empowering marginalized communities, particularly women. By analyzing various case studies and recent developments, the study finds that while microfinance contributes positively to financial inclusion and livelihood improvement, it also faces notable challenges such as high interest rates, overindebtedness, and limited scalability. The findings suggest that although microfinance can act as a catalyst for poverty reduction, its long-term impact depends on effective regulation, financial literacy, and integration with broader development policies.

Chaudhary Jabir,"Development Economics – Role of Microfinance in Poverty Alleviation: Success and Challenges" International Journal of Scientific Research and Engineering Development, V9(3): Page(1000-1008) May-June 2026. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.