ABSTRACT Ethiopia is one of the least developed countries with high incidence of poverty. Poverty Reduction has been the center of development strategy in the country. Microfinance Program on the other hand has been accepted as instruments in fighting against poverty throughout the world. The main objective of this study is to assess the impact of Somali Microfinance Institution (SMFI) on building the resilience of female headed households in Jigjiga City. To realize this objective cross-sectional survey was employed to collect data from 150 respondents, in which 75 were microfinance loan users and 75 were non-users. The study has employed both logit model and propensity score matching method to estimate the determinant factors that affect the participation of female heads of households in microfinance loan and the impact of microfinance on income of the female headed households. Quantitative research approach was used. The study revealed that preference for group lending, age of the household head, marital status of the household, attitude towards risk taking, experience of the household in loan use, average household income and adequacy of loan repayment were significant importance to determine microfinance institution. The propensity score estimation technique revealed that microfinance loan users were build better resilience than non clients of microfinance. Moreover, old age household-heads are more responsible to increase access of microfinance to elongate their family status. In addition educated households were less likely to access microfinance to enhance the gain from additional income sources rather they may get income from other sources. Hence, propensity score matching is capable of extracting comparable pair of treatment-comparison households. Therefore, to improve the microfinance accessibility the institution has to work in those identified factors. In fact, the Somali Microfinance Institution plays a significant role for the resilience of female headed households. Key words: Impact, Microfinance Institution, Resilience, Propensity Score Matching, Jigjiga