IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v132y2019icp299-308.html
   My bibliography  Save this article

Determinants of microfinance facility for installing solar home system (SHS) in rural Bangladesh

Author

Listed:
  • Khan, Tahsina
  • Khanam, Shamsun Nahar
  • Rahman, Md Habibur
  • Rahman, Syed Mahbubur

Abstract

Access to electricity in rural areas of the developing parts of the world is yet to reach a minimum satisfactory level. Bangladesh is no different, and hence widespread dissemination of solar home system (SHS) is a suitable vehicle to ensure greater access to electricity in remote rural areas of the country. A substantial portion of four million installed SHSs in Bangladesh has availed microcredit provided by various microfinance institutions. However, what determines the users' preference towards microcredit in installing SHS on the rooftop is yet to be answered. This research aims at analyzing the determinants of microfinance for installing SHS in rural Bangladesh. This research employed binary logistic regression to analyze the factors that affect selection of different mode of purchase: upfront payment or installment purchase. It identified a set of independent variables based on existing literature in order to investigate their influence on households’ choice between cash payment and installment purchase. The research found that more than 63% of the rural households in the study areas used SHS financed through microcredit. Level of education, location, family size and occupation affects choice of purchase mode. Logistic regression analysis showed that age, location and size of SHS affect the likelihoods of choosing upfront payment or installment purchase.

Suggested Citation

  • Khan, Tahsina & Khanam, Shamsun Nahar & Rahman, Md Habibur & Rahman, Syed Mahbubur, 2019. "Determinants of microfinance facility for installing solar home system (SHS) in rural Bangladesh," Energy Policy, Elsevier, vol. 132(C), pages 299-308.
    • Handle: RePEc:eee:enepol:v:132:y:2019:i:c:p:299-308
    DOI: 10.1016/j.enpol.2019.05.047
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421519303519
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2019.05.047?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Agrawala, Shardul & Carraro, Maelis, 2010. "Assessing the Role of Microfinance in Fostering Adaptation to Climate Change," Sustainable Development Papers 92709, Fondazione Eni Enrico Mattei (FEEM).
    2. Milford Bateman & Ha-Joon Chang, 2012. "Microfinance and the Illusion of Development: From Hubris to Nemesis in Thirty Years," World Economic Review, World Economics Association, vol. 2012(1), pages 1-13, September.
    3. Matthieu Chemin, 2008. "The Benefits and Costs of Microfinance: Evidence from Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 44(4), pages 463-484, April.
    4. Khan, Jibran & Arsalan, Mudassar H., 2016. "Solar power technologies for sustainable electricity generation – A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 414-425.
    5. Mishra, Pulak & Behera, Bhagirath, 2016. "Socio-economic and environmental implications of solar electrification: Experience of rural Odisha," Renewable and Sustainable Energy Reviews, Elsevier, vol. 56(C), pages 953-964.
    6. Shardul Agrawala & Maëlis Carraro, 2010. "Assessing the Role of Microfinance in Fostering Adaptation to Climate Change," Working Papers 2010.82, Fondazione Eni Enrico Mattei.
    7. Chakrabarty, Sayan & Islam, Tawhidul, 2011. "Financial viability and eco-efficiency of the solar home systems (SHS) in Bangladesh," Energy, Elsevier, vol. 36(8), pages 4821-4827.
    8. Ibtissem Baklouti, 2013. "Determinants of Microcredit Repayment: The Case of Tunisian Microfinance Bank," African Development Review, African Development Bank, vol. 25(3), pages 370-382, September.
    9. Komatsu, Satoru & Kaneko, Shinji & Ghosh, Partha Pratim, 2011. "Are micro-benefits negligible? The implications of the rapid expansion of Solar Home Systems (SHS) in rural Bangladesh for sustainable development," Energy Policy, Elsevier, vol. 39(7), pages 4022-4031, July.
    10. Biswas, Wahidul K. & Diesendorf, Mark & Bryce, Paul, 2004. "Can photovoltaic technologies help attain sustainable rural development in Bangladesh?," Energy Policy, Elsevier, vol. 32(10), pages 1199-1207, July.
    11. Li, Xia & Gan, Christopher & Hu, Baiding, 2011. "Accessibility to microcredit by Chinese rural households," Journal of Asian Economics, Elsevier, vol. 22(3), pages 235-246, June.
    12. Zhu, Bing & Zhang, Wenjun & Du, Jian & Zhou, Wenji & Qiu, Tong & Li, Qiang, 2011. "Adoption of renewable energy technologies (RETs): A survey on rural construction in China," Technology in Society, Elsevier, vol. 33(3), pages 223-230.
    13. Mark Schreiner & Héctor Horacio Colombet, 2001. "From Urban to Rural: Lessons for Microfinance from Argentina," Development Policy Review, Overseas Development Institute, vol. 19(3), pages 339-354, September.
    14. Sardianou, E. & Genoudi, P., 2013. "Which factors affect the willingness of consumers to adopt renewable energies?," Renewable Energy, Elsevier, vol. 57(C), pages 1-4.
    15. Morduch, Jonathan, 2000. "The Microfinance Schism," World Development, Elsevier, vol. 28(4), pages 617-629, April.
    16. Mondal, Md. Alam Hossain & Denich, Manfred, 2010. "Assessment of renewable energy resources potential for electricity generation in Bangladesh," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(8), pages 2401-2413, October.
    17. Islam, Md. Tasbirul & Shahir, S.A. & Uddin, T.M. Iftakhar & Saifullah, A.Z.A, 2014. "Current energy scenario and future prospect of renewable energy in Bangladesh," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 1074-1088.
    18. Asad K. Ghalib & Issam Malki & Katsushi S. Imai, 2011. "The Impact of Microfinance and its Role in Easing Poverty of Rural Households: Estimations from Pakistan," Discussion Paper Series DP2011-28, Research Institute for Economics & Business Administration, Kobe University.
    19. repec:wea:worler:v:2012:y:2012:i:1:p:2 is not listed on IDEAS
    20. Alam Hossain Mondal, Md. & Kamp, Linda M. & Pachova, Nevelina I., 2010. "Drivers, barriers, and strategies for implementation of renewable energy technologies in rural areas in Bangladesh--An innovation system analysis," Energy Policy, Elsevier, vol. 38(8), pages 4626-4634, August.
    21. Ibtissem Baklouti, 2013. "Determinants of Microcredit Repayment: The Case of Tunisian Microfinance Bank," African Development Review, African Development Bank, vol. 25(3), pages 370-382.
    22. Chowdhury, Shahriar A. & Mourshed, Monjur & Kabir, S.M. Raiyan & Islam, Moududul & Morshed, Tanvir & Khan, M. Rezwan & Patwary, Mohammad N., 2011. "Technical appraisal of solar home systems in Bangladesh: A field investigation," Renewable Energy, Elsevier, vol. 36(2), pages 772-778.
    23. Shardul Agrawala & Maëlis Carraro, 2010. "Assessing the Role of Microfinance in Fostering Adaptation to Climate Change," OECD Environment Working Papers 15, OECD Publishing.
    24. Peter, Raja & Dickie, Laurence & Peter, Vasanthi M., 2006. "Adoption of photovoltaic power supply systems: A study of key determinants in India," Renewable Energy, Elsevier, vol. 31(14), pages 2272-2283.
    25. Rahman, Syed M. & Ahmad, Mokbul M., 2013. "Solar Home System (SHS) in rural Bangladesh: Ornamentation or fact of development?," Energy Policy, Elsevier, vol. 63(C), pages 348-354.
    26. Escobar, Rodrigo A. & Cortés, Cristián & Pino, Alan & Pereira, Enio Bueno & Martins, Fernando Ramos & Cardemil, José Miguel, 2014. "Solar energy resource assessment in Chile: Satellite estimation and ground station measurements," Renewable Energy, Elsevier, vol. 71(C), pages 324-332.
    27. Sovacool, Benjamin K. & Drupady, Ira Martina, 2011. "Summoning earth and fire: The energy development implications of Grameen Shakti (GS) in Bangladesh," Energy, Elsevier, vol. 36(7), pages 4445-4459.
    28. Pode, Ramchandra, 2013. "Financing LED solar home systems in developing countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 596-629.
    29. Sinha, Dipendra, 1998. "Economic growth and government expenditure in China," MPRA Paper 18347, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Neneng Nurhasanah & Nunung Nurhayati & Maman Surahman, 2020. "Micro finance in sharia rural banks in Indonesia: a case study," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 7(4), pages 3455-3463, June.
    2. Amin, Sakib Bin & Chowdhury, Mainul Islam & Jamasb, Tooraj & Khan, Farhan & Nepal, Rabindra, 2023. "Green Energy Finance and Gender Disparity: The Case of Mountain Areas in Bangladesh," Working Papers 2-2023, Copenhagen Business School, Department of Economics.
    3. Mugisha, Joshua & Ratemo, Mike Arasa & Bunani Keza, Bienvenu Christian & Kahveci, Hayriye, 2021. "Assessing the opportunities and challenges facing the development of off-grid solar systems in Eastern Africa: The cases of Kenya, Ethiopia, and Rwanda," Energy Policy, Elsevier, vol. 150(C).
    4. Han, Jiashi & Zhang, Lei & Li, Yang, 2022. "Spatiotemporal analysis of rural energy transition and upgrading in developing countries: The case of China," Applied Energy, Elsevier, vol. 307(C).
    5. Zaman, Rafia & Das, Debasish Kumar & van Vliet, Oscar & Posch, Alfred, 2021. "Distributional inequality in market-based solar home system programs: Evidence from rural Bangladesh," Energy Economics, Elsevier, vol. 103(C).
    6. Huaquan Zhang & Yashuang Tang & Martinson Ankrah Twumasi & Abbas Ali Chandio & Lili Guo & Ruixin Wan & Shilei Pan & Yun Shen & Ghulam Raza Sargani, 2022. "The Effects of Ecological Public Welfare Jobs on the Usage of Clean Energy by Farmers: Evidence from Tibet Areas—China," Agriculture, MDPI, vol. 12(7), pages 1-16, June.
    7. Surajo Musa Yakubu & Asmadi Mohamed Naim & Rosemaliza Ab Rashid, 2020. "Empirical Study on Corporate image, Customer Perceived Value and Customers’ Acceptance of Islamic Micro finance in Kano State Nigeria: The Moderating Effect of Religiosity," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 6(1), pages 78-84, March.
    8. Wichsinee Wibulpolprasert & Umnouy Ponsukcharoen & Siripha Junlakarn & Sopitsuda Tongsopit, 2021. "Preliminarily Screening Geographical Hotspots for New Rooftop PV Installation: A Case Study in Thailand," Energies, MDPI, vol. 14(11), pages 1-30, June.
    9. Khan, Imran, 2020. "Impacts of energy decentralization viewed through the lens of the energy cultures framework: Solar home systems in the developing economies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 119(C).
    10. Hyun, Suk & Taghizadeh-Hesary, Farhad & Shim, Hyoung Suk, 2021. "Modeling solar energy system demand using household-level data in Myanmar," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 629-639.
    11. Thomas, P.J.M. & Sandwell, P. & Williamson, S.J. & Harper, P.W., 2021. "A PESTLE analysis of solar home systems in refugee camps in Rwanda," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
    12. Nathanael Ojong, 2021. "Solar Home Systems in South Asia: Examining Adoption, Energy Consumption, and Social Practices," Sustainability, MDPI, vol. 13(14), pages 1-16, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rahman, Syed M. & Ahmad, Mokbul M., 2013. "Solar Home System (SHS) in rural Bangladesh: Ornamentation or fact of development?," Energy Policy, Elsevier, vol. 63(C), pages 348-354.
    2. Thomas, P.J.M. & Sandwell, P. & Williamson, S.J. & Harper, P.W., 2021. "A PESTLE analysis of solar home systems in refugee camps in Rwanda," Renewable and Sustainable Energy Reviews, Elsevier, vol. 143(C).
    3. Xavier Lemaire, 2018. "Solar home systems and solar lanterns in rural areas of the Global South: What impact?," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 7(5), September.
    4. Nicole D. Peterson, 2012. "Developing Climate Adaptation: The Intersection of Climate Research and Development Programmes in Index Insurance," Development and Change, International Institute of Social Studies, vol. 43(2), pages 557-584, March.
    5. Kifayat Ullah & Abdul Qayyum Mohsin & Abdul Saboor & Saranjam Baig, 2020. "Financial Inclusion, Socioeconomic Disaster Risks and Sustainable Mountain Development: Empirical Evidence from the Karakoram Valleys of Pakistan," Sustainability, MDPI, vol. 12(22), pages 1-26, November.
    6. Joshi, Lalita & Choudhary, Deepak & Kumar, Praveen & Venkateswaran, Jayendran & Solanki, Chetan S., 2019. "Does involvement of local community ensure sustained energy access? A critical review of a solar PV technology intervention in rural India," World Development, Elsevier, vol. 122(C), pages 272-281.
    7. Castells-Quintana, David & del Pilar Lopez-Uribe, Maria & McDermott, Thomas K.J., 2018. "A review of adaptation to climate change through a development economics lens," Working Papers 309605, National University of Ireland, Galway, Socio-Economic Marine Research Unit.
    8. Karl Harvey Schultz, 2012. "Financing climate adaptation with a credit mechanism: initial considerations," Climate Policy, Taylor & Francis Journals, vol. 12(2), pages 187-197, March.
    9. Azad, Md Javed & Pritchard, Bill, 2022. "Financial capital as a shaper of households' adaptive capabilities to flood risk in northern Bangladesh," Ecological Economics, Elsevier, vol. 195(C).
    10. Komatsu, Satoru & Kaneko, Shinji & Ghosh, Partha Pratim & Morinaga, Akane, 2013. "Determinants of user satisfaction with solar home systems in rural Bangladesh," Energy, Elsevier, vol. 61(C), pages 52-58.
    11. Khan, Imran, 2020. "Impacts of energy decentralization viewed through the lens of the energy cultures framework: Solar home systems in the developing economies," Renewable and Sustainable Energy Reviews, Elsevier, vol. 119(C).
    12. Alam, Majbaul & Bhattacharyya, Subhes, 2017. "Are the off-grid customers ready to pay for electricity from the decentralized renewable hybrid mini-grids? A study of willingness to pay in rural Bangladesh," Energy, Elsevier, vol. 139(C), pages 433-446.
    13. Ahammed, Faisal & Azeem, Abdullahil, 2013. "Selection of the most appropriate package of Solar Home System using Analytic Hierarchy Process model in rural areas of Bangladesh," Renewable Energy, Elsevier, vol. 55(C), pages 6-11.
    14. Davide Forcella & Rafael Moser & Lauro Emilio Gonzales Farias, 2016. "Rural Microfinance and Climate Change: Geographical Credits Allocation and Vulnerability. An Analysis of Agroamigo in Brazil’s Northeastern States," Working Papers CEB 16-011, ULB -- Universite Libre de Bruxelles.
    15. Castells-Quintana, David & Lopez-Uribe, Maria del Pilar & McDermott, Thomas K.J., 2018. "Adaptation to climate change: A review through a development economics lens," World Development, Elsevier, vol. 104(C), pages 183-196.
    16. Dilruba Khanam & Muhammad Mohiuddin & Asadul Hoque & Olaf Weber, 2018. "Financing micro-entrepreneurs for poverty alleviation: a performance analysis of microfinance services offered by BRAC, ASA, and Proshika from Bangladesh," Journal of Global Entrepreneurship Research, Springer;UNESCO Chair in Entrepreneurship, vol. 8(1), pages 1-17, December.
    17. Lucia Dalla Pellegrina & Giorgio, Di Maio & Paolo Landoni & Beatrice Rama, 2019. "Activating women cognitive abilities: Impact of a financial literacy pilot program in India," Working Papers 412, University of Milano-Bicocca, Department of Economics, revised May 2019.
    18. Rafael Moser & Davide Forcella & Lauro Emilio Gonzales Farias, 2016. "Microfinance and climate change: threats and opportunities, the case of Brazil’s largest rural MFIs, Agroamigo and Cresol," Working Papers CEB 16-010, ULB -- Universite Libre de Bruxelles.
    19. Md Asaduzzaman Shoeb & GM. Shafiullah, 2018. "Renewable Energy Integrated Islanded Microgrid for Sustainable Irrigation—A Bangladesh Perspective," Energies, MDPI, vol. 11(5), pages 1-19, May.
    20. Hasan Mahmud & Joyashree Roy, 2021. "Barriers to Overcome in Accelerating Renewable Energy Penetration in Bangladesh," Sustainability, MDPI, vol. 13(14), pages 1-28, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:132:y:2019:i:c:p:299-308. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.