Transforming Poverty: Assessing the Significance of the Akhuwat Islamic Microfinance Model across Absolute, Moderate, and Relative Poverty Strata

Abstract

Purpose: The goal of this study is to determine how the Akhuwat Islamic Microfinance Mode (AIMM) affects several types of poverty in Pakistan, including absolute, moderate, and relative poverty. Design/Methodology/Approach: In this study, primary data from Akhuwat Microfinance borrowers were collected using the stratified sample technique. The population was divided into four groups: manufacturing concerns, trading concerns, services concerns, and non-trading concerns. Additionally, a two-stage structural modelling technique was used for further data analysis. The measurement model was used to assess the reliability and validity, while the structural model was used to gauge the link between the underlying variables.  Findings: The study found positive and significant impact of Akhuwat Islamic Microfinance Mode (AIMM) on different dimensions of poverty, including absolute poverty, moderate poverty and relative poverty. Therefore, lending practices of Akhuwat enables the borrowers to reduce their absolute, moderate, and relative poverty.  Implications/Originality/Value: The role Akhuwat's unique approach to address different poverty levels including absolute poverty, moderate poverty and relative poverty is hardly investigate in the context of Pakistan by applying the Abraham Maslow's Hierarchy of Needs Theory.