Abstract—The study attempts to assess the effectiveness of Microfinance (MF) services in enhancing the economic empowerment of poor beneficiary households in Sri Lanka. In theory, if the poor households invest the MF services (in terms of both the financial and social intermediationary functions) in the income generating livelihood activities, they could be easily crossed the poverty line through achieving economic empowerment. International evidence of the impact of MF on economic empowerment of beneficiary households (HHS) is however, remaining in contested. Research findings of most the studies on the MF sector in Sri Lanka are also not exception of this phenomena. The data and information for the study were collected from a sample survey of 250 households including 100 households (whose participating period with MF is less than three year) for comparison purpose. The impact variables include the change of income, savings, occupational development, development of new income sources, and development of the family economy. In analysis average treatment effect were calculated and mean differences of each of the impact variable were statically tested using T- Test, and binary logistic regression models. On the base of analysis, the study found that the economic empowerment of long-beneficiary households (HHS) have been positively significant and employability is not statistically significant. Index Terms—Microfinance, Economic Empowerment, Beneficiary Households, Sri Lanka I. INTRODUCTION he modern concept of microfinance emerged in the 1970s with the efforts of Professor Mohammad Yunus, who established Grameen Bank, a special kind of bank for the poor. Since its inception in the villages of Bangladesh in the 1970s, the modern Microfinance revolution is emerging in many countries of the world as a tool for poverty reduction [1]. The award of the Nobel Peace prize to Yunus and the acceptance of Microfinance as one of the primary tools to attack poverty seem to have galvanized its opponents. Over the years, the discourse has shifted from “microcredit” to “microfinance,” Over the past years; the number of microfinance institutions has increased rapidly Manuscript received December 08, 2017. J. Krishanthi Mallika is a senior lecturer at Department of Business Management, Faculty of Management Studies, Rajarata University of Sri Lanka, Mihintale, Sri Lanka (phone: +94 ; e-mail: krishanthimallika@yahoo.com). Wiraj Udara Wickramaarachchi was a Lecturer at Kurunegala Campus, Sri Lanka Institute of Information Technology, Kurunegala, Sri Lanka. He is now with the School of Computer Science and Technology, Wuhan University of Technology, Wuhan, Hubei, P.R. China (e-mail: wirajudara@gmail.com). and therewith the number of borrowers and the total amount of outstanding loans [2]. Empowerment refers to increasing the spiritual, social and economic strength of individuals and communities. It often involves in developing confidence of the individual in his/her own capacities. It indicates the expression of self- strength, control, self-power, self-reliance, freedom of choice and life of dignity, in accordance with one’s values, capable of fighting for one’s rights, independence, own decision making, being free, awakening, and capability. Empowerment is relevant at the individual and collective level, and can be economic or social. As a consequence of economic empowerment, income, savings, employment, job opportunities, new income sources, fixed income sources and self-employment increases and thus reducing unemployment and indebtedness. Empowering poor people in the side of economically is a key concern in any attempt of alleviating the poverty of a country. Poverty reduction is the prime objective of any developing economy. Microfinance programs play an important role in poverty reduction in many developing countries including Sri Lanka. There is consensus that Micro Finance Institutions extend financial services to the poor usually ignored by traditional financial intermediaries. Today there is broad awareness that poor people have many and diverse financial service needs, which are typically met by a variety of providers through multiple financial services [3]. Sri Lanka is an island country which is in Indian Ocean next to the southern part of India. The population is approximately 21Million in 2016 and 70% of its population living in the rural areas whose main income is agriculture. With a human development index of 73 out of 188 countries and a literacy rate of 93.2%. Sri Lanka recorded the highest growth rate after independence (in 1948), in 2011viz 8.3 percent. Further, the per capita income of the country had remarkably increased from $871 in 2000 to $3835 by 2015 [4]. Sri Lanka has become a popular country among the world due to the eradication of civil war in victorious way. Now Sri Lanka struggle with the development targets. At present Sri Lanka occupy various strategies to eradicate poverty. The objective of this study is assessing the impact of MFIs on economic empowerment of poor people. The objective was derived from the significance of study and the research gap, identified by the scholars who have done significant contribution in the area of MFIs, impact on poverty alleviation research. Economic empowerment indicators are the utilization of Microfinance as an Instrument for Economic Empowerment of the Poor People in Sri Lanka J. Krishanthi Mallika, and Wiraj Udara Wickramaarachchi T Proceedings of the International MultiConference of Engineers and Computer Scientists 2019 IMECS 2019, March 13-15, 2019, Hong Kong ISBN: 978-988-14048-5-5 ISSN: 2078-0958 (Print); ISSN: 2078-0966 (Online) IMECS 2019