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Microcredit and Poverty: When Microcredit Works and When It Doesn’t

Author

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  • M.G. Quibria

    (Department of Economics, Morgan State University, USA)

Abstract

This paper explores the relationship between microcredit and poverty reduction. To investigate this question, we posit a bare-bone, household model that outlines the economic environment within which various types of familymicroenterprises operate. It highlights a number of issues that impinge on household earnings such as the nature of the labor market, technology, product demand and entrepreneurial skills. The paper argues that the impact of microcredit is likely to be different across household types as well as across different economic environments. The paper identifies several important demand and supply constraints to the household’s graduation from poverty. These constraints are difficult to overcome in a traditional economic environment, marked by stagnant technology and market saturation.

Suggested Citation

  • M.G. Quibria, 2015. "Microcredit and Poverty: When Microcredit Works and When It Doesn’t," Journal of Reviews on Global Economics, Lifescience Global, vol. 4, pages 126-138.
    • Handle: RePEc:lif:jrgelg:v:4:y:2015:p:126-138
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    More about this item

    Keywords

    Microcredit; poverty reduction; labor market; and technology.;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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