Vol. 7, Issue 1, Part E (2025)

Microfinance has emerged as a powerful tool for poverty alleviation and economic development, providing financial services to underserved populations, particularly in developing economies. This study examines the role and impact of microfinance in enhancing financial inclusion, fostering entrepreneurship, and empowering marginalized communities. Using secondary data from reputable sources, the research analyses microfinance's contribution to income generation, employment, and overall economic stability. While microfinance has proven effective in improving livelihoods, challenges such as high-interest rates, over-indebtedness, and sustainability concerns persist. The study highlights policy recommendations, including regulatory improvements, financial literacy initiatives, and the integration of technology, to maximize microfinance’s positive impact. The findings underscore microfinance’s potential to drive inclusive growth, emphasizing the need for strategic reforms to ensure long-term sustainability and greater socioeconomic benefits.