Financial investment in urban business is one of development interventions to improve per capita income and consumption of urban population. This study is initiated with objectives of analyzing the impact of ADCSI (Adiss Credit and Saving Institution) on clients’ poverty reduction and identifying determinants of borrowing fund from ADCSI. The study employed primary survey data collected from 120 sample respondents selected using multi-stage cluster sampling. Propensity Score Matching (PSM) and Tobit model are used for determining the impact of ADCSI for poverty reduction and for identifying determinants of borrowing from ADCSI. The Average Treatment effect of Treated (ATT) indicated that, the per capita consumption expenditure of clients and non-clients have no any significant difference. Accordingly, other source of income of the household is found to be positively and significantly related with the amount of credit borrowed. The justification behind the result was that households earning more other source of income (other than monthly salary) have been motivated to borrow high amount of credit than others who have few or no other source of income. The study also revealed that occupation ownership is negatively and significantly associated with the amount of credit borrowed. This implies that households who have formal occupation need less amount of fund or credit than those households who have no formal occupation. Besides, being an owner of house is positively associated with the amount of credit borrowed. This is evident that the likelihood of accessing credit increases when households have their own house as it acts as collateral. Hence, minimizing obstacles that hinder the poor to access the credit like collateral, supervise and ensure whether the creditors invest the credit on production activities, promoting the current effort made to create job opportunities for unemployed particularly youths are suggested solutions.

Keywords: Microfinance, Impact Analysis, poverty, PSM, Tobit