Microfinance service is designed to help the poor section of the society which is not served by the formal banks. After the successful history of the Grameen bank, the service is widely spread in all over the world. In Ethiopia, the service of microfinance institutions is available to the poor section of the society with the objective reducing the level of poverty. As Poverty reduction strategy, the impact of microfinance institutions should be evaluated whether they safeguard the society from becoming poorer. This book evaluates the service of microfinance institutions in households' vulnerability to poverty by using primary data.The result shows us that,microfinance institutions can reduce household vulnerability to poverty and microfinance service user households are less vulnerable to poverty than non- users. Among the different vulnerability components poverty is the highest source of vulnerability which contributes almost 100 percent to the total level of vulnerability. Policy makers working in development related areas, microfinance service providers, researchers and students in the field of development economics will found this book more useful.