microfinance an approach for increasing output in the agricultural sector and poverty reduction in rural areas

considering the expansion of global poverty and its resulting concerns, the objectives of the millennium development goals (mdgs) may not be achieved unless a solution is found for this widespread phenomenon. therefore finding a solution for poverty reduction and improving the welfare of the vulnerable group has become a universal objective. this paper discusses the poor performance of formal financial markets and financial institutions in order to help the poor in developing countries. the paper argues that microfinance and microcredit are suitable substitutions for helping the poor. some international experiences suggest that microfinance can empower the vulnerable group, lifting them out of poverty and helping them select a desired path. applying econometrics and statistical techniques to iranian data, it has been seen that microcredit and microfinance can play a key role in economic growth and added-value in the agricultural sector. this in turn will result in an overall poverty reduction.