Prague Economic Papers 2013, 22(3):403-417 | DOI: 10.18267/j.pep.459

Micro-Credit and Poverty Reduction: A Case of Bangladesh

Mohummed Shofi Ullah Mazumder1, Lu Wencong2
1 Dept. of Agricultural Economics and Management, Zi-Jin-Gang Campus, Zhejiang University, Hangzhou - 310085, China; Dept of AEIS, Sher-e-Bangla Agricultural University, Sher-e-Bangla Nagar, Dhaka - 1207, Bangladesh (shofi_keron@yahoo.com).
2 Dept. of Agricultural Economics and Management, Zi-Jin-Gang Campus, Zhejiang University, Hangzhou - 310085, China (wenclu@zju.edu.cn).

Bangladesh is a pioneer and home of conceptualizing micro-credit program. It has undertaken a number of such programs to reduce poverty and bring about socio-economic changes in the rural community. The main purpose of this paper is to give an overview about access to micro-credit for rural poor and its impact on their poverty situation and relevant factors related to income of the micro-credit recipients. Data was collected in two phases from the same respondents (April 2009 and April 2010) using a face-to-face interview schedule from a sample of 360 micro-credit recipients. Additionally, another set of 60 non-credit beneficiary respondents was also taken as a control group to compare the consequences of the program. Major findings reveal that positive impact was found on income, assets endowment, standard of living and poverty reduction. Utilization of credit appears to be major factor for credit recipients raising income compared to their control group. This shows that micro-credit tends to be an important factor to have an impact on household income which minimizes the poverty situation to a reasonable extent.

Keywords: micro-credit, socio-economic impact, poverty alleviation
JEL classification: H81

Published: January 1, 2013  Show citation

ACS AIP APA ASA Harvard Chicago Chicago Notes IEEE ISO690 MLA NLM Turabian Vancouver
Mazumder, M.S.U., & Wencong, L. (2013). Micro-Credit and Poverty Reduction: A Case of Bangladesh. Prague Economic Papers, 22(3), 403-417. doi: 10.18267/j.pep.459
Download citation
  • BibTeX (.bib)
  • Bookends (.ris)
  • EasyBib (.ris)
  • EndNote (.enw)
  • EndNote 8 (.xml)
  • ISI WoS (.isi)
  • Medlars (.medlars)
  • Mendeley (.ris)
  • MODS (.xml)
  • Papers (.ris)
  • RefWorks (.txt)
  • RefManager (.ris)
  • RIS (.ris)
  • MS Word (.xml)
  • Zotero (.ris)
    • Open full article

    References

    1. Adam, A. M. (2010), "Financial Openness Induced Growth and Poverty Reduction." The International Journal of Applied Economics and Finance, 5: 75-86. Go to original source...
    2. Assessment of Micro-Credit Program in Bangladesh. (2010), Retrieved from www.docstoc.com/.../Assessment-of-Micro-Credit-Programme-in-Bangladesh.
    3. Bangladesh Bureau of Statistics. (2007), Statistical Pocket Book. Statistics Division. Ministry of Planning. Government of Peoples Republic of Bangladesh. Dhaka. Retrieved from: www.bbs.gov.bd /Home.aspx.
    4. Bangladesh Microfinance Statistics. (2009), Retrieved from Institute of Microfinance (InM) and Credit and Development Forum (CDF). Available at http://www.inm.org.bd/statistics/2009/Chapter%202_Trends%20and%20Growth.pdf.
    5. Barnes, C., Keogh, E. (1999), An Assessment of the Impact of Zambuko's Microenterprise Program in Zimbabwe: Baseline findings. Working Paper. Management Systems International (MSI). Retrieved from http://www.mip.org.
    6. Copestake, J., Johnson, S., Wright, K. (2002), Impact Assessment of Micro-Finance: towards a New Protocol for Collection and Analysis of Qualitative Data (Working Paper No. 7). Brighton: Institute of Development Studies, University of Sussex.
    7. Extreme Poverty Policies of Donors in Bangladesh: An Overview. (2007), Retrieved from http://www.extreme-poverty.org/files/Shiree_Donor_Policy.pdf.
    8. Ghatak, M. (1999), "Group Lending Local Information and Peer Selection." Journal of Development Economics, Vol. 60, 1999. pp. 27-50. Go to original source...
    9. Goetz, A.-M., Sengupta, R. (1996), "Who Takes the Credit? Gender, Power, and Control over Loan Use in Rural Credit Programs in Bangladesh." World Development, Vol. 24, No. 1. pp. 45-63. Go to original source...
    10. Haque, S., Masahiro, Y. (2009), "NGOs-MFIs Members-impact Assessment Survey." International Journal of Business, Economics, Finance and Management Science, Vol. 1, No. 1, 2009.
    11. Hashemi, S. M., Schuler, S. R. (1996), "Rural Credit Programs and Women's Empowerment in Bangladesh." World Development 24(4): pp. 635-653. Go to original source...
    12. Ismail, S. (2000), Elimination of Poverty: Challenges and Islamic Strategies, Islamic Economic Studies, Vol. 8, No. 1, p.1.
    13. Jehangir, W. A., Ashfaq, M., Ali, A., Sarwar, N. (2002), Use of Credit for Poverty Reduction by Small Farmers. Journal of Applied Science, pp. 2: 777-780. Go to original source...
    14. Khandker, S. R. (2003), "Microfinance and Poverty: Evidence Using Panel Data from Bangladesh." (World Bank Policy Research Working Paper 2945). Washington DC: World Bank. Go to original source...
    15. Kothari, C. R. (2004), Research Methodology: Methods and Techniques. India: Wishwa Prakashan.33.
    16. Littlefield, E., Morduch, J., Mesbahuddin, S. H. (2003), "Is Microfinance an Effective Strategy to Reach the Millennium Development Goals?" CGAP Focus Note. Washington, DC: CGAP.
    17. Ledgerwood, J. (1999), Microfinance Handbook: An Institutional and Financial Perspective. Washington: The World Bank. Go to original source...
    18. McNamara, N., Morse, S. (1998), "Donors and Sustainability in the Provision of Financial Services in Nigeria." IDS Bulletin, Vol. 29, pp. 91-101. Go to original source...
    19. Montgomery, R., Bhattacharya, D., Hulme, D. (1996), "Credit for the Poor in Bangladesh: The BRAC Rural Development Program and the Government Thana Resource Development and Employment Program." In Hulme, D., Mosley, P., Finance against Poverty, Vol. 1 and 2, Rutledge, London.
    20. MkNelly, B., Dunford, Ch. (1999), "Impact of Credit with Education on Mothers and Their Young Children's Nutrition: CRECER Credit with Education Program in Bolivia." Freedom from Hunger Research Paper No. 5. Freedom from Hunger. Davis, CA.
    21. MkNelly, B., Stack. K. E. (1998), "Loan Size Growth and Sustainability in Village Banking Programs." Small Enterprise Development, 9 (2): pp. 4-16. Go to original source...
    22. Otero, M. (1999), Microfinance and the Poor. Journal of International Development. Vol. 5, pp. 65-72.
    23. Rahman, S., Mallik, G., Raja, P. N. (2003), "Micro-Credit Programs and Consumption Behavior: Are the Borrowers Better Off? Evidence from Bangladesh". P.1. Retrieved from https://editorialexpress.com/cgi-bin/.../download.cgi?db...id.
    24. Rodenbeck, M. (1998), "An Emerging Agenda for Development in the Middle East and North Africa." Retrieved from http://www.idrc.ca/books/focus/930/12rodenb.html.
    25. Rogaly, B. (1996), "Micro-Finance Evangelism, Destitute Women and the Hard Selling of a New AntiPoverty Formula." Development in Practice 6 (2): pp. 100-112. Go to original source...
    26. Roodman, D., Morduch, J. (2009), "The Impact of Micro-Credit on the Poor in Bangladesh: Revisiting the Evidence." (Working Paper No. 174). Washington DC: Centre for Global Development.
    27. Schreiner, M., Colombet, H. H. (2001), "From Urban to Rural: Lessons for Microfinance from Argentina." Development Policy Review, 19(3), pp. 339-354. Go to original source...
    28. Sen, G. (1997), "Empowerment as an Approach to Poverty." Human Development Report. pp. 96-97.
    29. Sharma, M., Zeller, M. (1999), "Placement and Outreach of Group-Based Credit Organizations: The Cases of ASA, BRAC, and PROSHIKA in Bangladesh." World Development, Vol. 27, No. 12, pp. 2123-2136. Go to original source...
    30. Siddiqui, B. N., Asif, F., Iqbal, S., Hassan, M. Z. Y., Malik, N. A., Najwa, M. S. (2002), "Impact of Loan Facilities Provided by PRSP for Poverty Alleviation in Farming Communities of Faisalabad." Journal of Applied Sciences, Vol. 2, No. 11, pp. 1002-1004. Go to original source...
    31. Smith, A. (1976), An Inquiry into the Nature and Causes of The Wealth of Nations. 1937 Ed., p. 93. Retrieved from www.marxists.org/reference/.../smith-adam/works/.../index.htm
    32. Socio-Economic Indicator of Bangladesh. (2007), Retrieved from mof.gov.bd/en/budget/er/2007/ksei. pdf?phpMyAdmin.
    33. Stiglitz, J. E. (1990), "Peer Monitoring and Credit Markets." The World Bank Economic Review, Vol. 4, No. 3, 1990. pp. 351-66. Go to original source...
    34. The Bangladesh Development Studies. (2004), Bangladesh Institute of Development Studies (BIDS).Volume XXX, Number 1&2. Retrieved from http://www.bids.org.bd/Abstract01.php?FM=6&SM=143.
    35. The Role of Micro-Credit in Poverty Alleviation. (2009), "The Financial Express." Retrieved from http://www.thefinancialexpress-bd.com/2009/06/07/68933.html.
    36. The Micro-credit Summit. (1997), "The Micro-Credit Summit: Declaration and Plan of Action." Washington, D.C. Retrieved from http://www.microcreditsummit.org/.
    37. UNDP. (2007), "Human Development Index (HDI) of Bangladesh in UN Report." Retrieved from http://bdoza.wordpress.com/2007/12/14/human-development-index-hdi-of-bangladesh-in-un-report/.
    38. Varian, H. R. (1990), "Monitoring Agents with Other Agents." Journal of Institutional and Theoretical Economics, Vol. 146, 1990. pp. 153-174.
    39. Westover, J. (2008), "The Record of Microfinance: The Effectiveness/Ineffectiveness of Microfinance Programs as a Means of Alleviating Poverty." Electronic Journal of Sociology. Retrieved from http://www.sociology.org/content/2008/_westover_finance.pdf.
    40. World Bank. (2005), "Bangladesh PRSP Forum Economic Update: Recent Developments and Future Perspectives." Bangladesh Development Series, Paper No. 1, p. 25, World Bank Office, Dhaka. Go to original source...
    41. World Savings Bank Institute. (2010), "Financial Service Access Can Accelerate Millennium Development Goals Achievement." Statement of 19 March. Retrieved from http://www.wsbi.org/uploadedFiles/Announcements/Millenium%20Development%20Goals%20Op%20Ed%20international%20-%20final%20version.pdf.

    This is an open access article distributed under the terms of the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY NC ND 4.0), which permits non-comercial use, distribution, and reproduction in any medium, provided the original publication is properly cited. No use, distribution or reproduction is permitted which does not comply with these terms.


    Return to the content