Microfinance has been increasingly acknowledged as a significant tool for poverty reduction in development. There has been an extensive debate on the success of microfinance institutions for women’s poverty reduction. A number of literature debates suggest microfinance institutions as a panacea to poverty reduction. However, argument from the literature review in this study showed that, although microfinance may have positive impacts on poverty reduction, it is unlikely to be an easy solution to poverty reduction. The extent to which microfinance institutions can be effective in poverty reduction is still questionable.