IDEAS home Printed from https://ideas.repec.org/a/spr/qualqt/v51y2017i4d10.1007_s11135-016-0342-1.html
   My bibliography  Save this article

Microfinance and savings among the poor: evidence from Bangladesh microfinance sector

Author

Listed:
  • Shamima Nasrin

    (University of Malaya
    Government of Bangladesh)

  • Angathevar Baskaran

    (University of Malaya
    Tshwane University of Technology)

  • Rajah Rasiah

    (University of Malaya)

Abstract

Despite rapid financial development, the coverage of the formal banking sector and population holding deposit accounts in Bangladesh (53.7 %) is still below the global average (62 %). As a consequence, Micro Finance Institutions (MFIs) have started providing financial services to these large section of people who have little access to finance otherwise. This paper examines empirically the impact of MFIs on the savings of poor in Bangladesh using the data from Microcredit Regulatory Authority database. The sample comprises 719 MFIs with data over the period, 2007–2012. The results show that MFI numbers and number of branches are positively associated with saving in the sector, which supports the institutional savings theory that posits that availability of financial institutions shapes saving behavior of people. Also, number of employees and number of borrowers positively affect saving. These findings from a large database contributes to the literature on the impact MFIs on savings behavior.

Suggested Citation

  • Shamima Nasrin & Angathevar Baskaran & Rajah Rasiah, 2017. "Microfinance and savings among the poor: evidence from Bangladesh microfinance sector," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(4), pages 1435-1448, July.
    • Handle: RePEc:spr:qualqt:v:51:y:2017:i:4:d:10.1007_s11135-016-0342-1
    DOI: 10.1007/s11135-016-0342-1
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s11135-016-0342-1
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s11135-016-0342-1?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. Aiyar, Shekhar & Duval, Romain & Puy, Damien & Wu, Yiqun & Zhang, Longmei, 2018. "Growth slowdowns and the middle-income trap," Japan and the World Economy, Elsevier, vol. 48(C), pages 22-37.
    2. Anke E. Hoeffler, 2002. "The augmented Solow model and the African growth debate," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(2), pages 135-158, May.
    3. Ram, Rati, 1982. "Dependency Rates and Aggregate Savings: A New International Cross-Section Study," American Economic Review, American Economic Association, vol. 72(3), pages 537-544, June.
    4. Durlauf, Steven N. & Kourtellos, Andros & Minkin, Artur, 2001. "The local Solow growth model," European Economic Review, Elsevier, vol. 45(4-6), pages 928-940, May.
    5. Dalgaard, Carl-Johan & Strulik, Holger, 2013. "The history augmented Solow model," European Economic Review, Elsevier, vol. 63(C), pages 134-149.
    6. Michael Sherraden & Mark Schreiner & Sondra Beverly, 2003. "Income, Institutions, and Saving Performance in Individual Development Accounts," Economic Development Quarterly, , vol. 17(1), pages 95-112, February.
    7. Arestis, Philip & Demetriades, Panicos O, 1997. "Financial Development and Economic Growth: Assessing the Evidence," Economic Journal, Royal Economic Society, vol. 107(442), pages 783-799, May.
    8. Asif Dowla & Dewan Alamgir, 2003. "From microcredit to microfinance: evolution of savings products by MFIs in Bangladesh," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(8), pages 969-988.
    9. Gomes, Fábio Augusto Reis & Ribeiro, Priscila Fernandes, 2015. "Estimating the elasticity of intertemporal substitution taking into account the precautionary savings motive," Journal of Macroeconomics, Elsevier, vol. 45(C), pages 108-123.
    10. Demirguc-Kunt,Asli & Klapper,Leora & Singer,Dorothe & Van Oudheusden,Peter, 2015. "The Global Findex Database 2014 : measuring financial inclusion around the world," Policy Research Working Paper Series 7255, The World Bank.
    11. De Bandt, Olivier & Davis, E. Philip, 2000. "Competition, contestability and market structure in European banking sectors on the eve of EMU," Journal of Banking & Finance, Elsevier, vol. 24(6), pages 1045-1066, June.
    12. Prina, Silvia, 2015. "Banking the poor via savings accounts: Evidence from a field experiment," Journal of Development Economics, Elsevier, vol. 115(C), pages 16-31.
    13. Jalilian, Hossein & Kirkpatrick, Colin, 2002. "Financial Development and Poverty Reduction in Developing Countries," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 7(2), pages 97-108, April.
    14. Staikouras, Christos & Mamatzakis, Emmanuel & Koutsomanoli-Filippaki, Anastasia, 2008. "An empirical investigation of operating performance in the new European banking landscape," Global Finance Journal, Elsevier, vol. 19(1), pages 32-45.
    15. Han, Chang-Keun & Sherraden, Michael, 2009. "Do institutions really matter for saving among low-income households? A comparative approach," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(3), pages 475-483, June.
    16. Hoeffler, Anke E, 2002. "The Augmented Solow Model and the African Growth Debate," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 64(2), pages 135-158, May.
    17. Sorger, Gerhard, 2002. "On the Long-Run Distribution of Capital in the Ramsey Model," Journal of Economic Theory, Elsevier, vol. 105(1), pages 226-243, July.
    18. Lee, Kevin & Pesaran, M Hashem & Smith, Ron, 1997. "Growth and Convergence in Multi-country Empirical Stochastic Solow Model," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(4), pages 357-392, July-Aug..
    19. Khandker , Shahidur R., 2000. "Savings, Informal Borrowing, and Microfinance," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 26(2-3), pages 49-78, June-Sept.
    20. Jones, Larry E. & Manuelli, Rodolfo E., 2005. "Neoclassical Models of Endogenous Growth: The Effects of Fiscal Policy, Innovation and Fluctuations," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 1, pages 13-65, Elsevier.
    21. Chen, Kai & Gong, Xiaoju & Marcus, Richard D., 2014. "The new evidence to tendency of convergence in Solow model," Economic Modelling, Elsevier, vol. 41(C), pages 263-266.
    22. Beverly, Sondra G. & Sherraden, Michael, 1999. "Institutional determinants of saving: implications for low-income households and public policy," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 28(4), pages 457-473.
    23. Leff, Nathaniel H & Sato, Kazuo, 1975. "A Simultaneous-Equations Model of Savings in Developing Countries," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1217-1228, December.
    24. Steven N. Durlauf & Paul A. Johnson, 1992. "Local Versus Global Convergence Across National Economies," NBER Working Papers 3996, National Bureau of Economic Research, Inc.
    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. Icíar García-Pérez & María Ángeles Fernández-Izquierdo & María Jesús Muñoz-Torres, 2020. "Microfinance Institutions Fostering Sustainable Development by Region," Sustainability, MDPI, vol. 12(7), pages 1-23, March.

    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. Wiesław Dębski & Bartosz Świderski, 2016. "An Allocation Analysis of Polish Household Savings Invested in Financial Assets, 2003 – 2014," Contemporary Economics, University of Economics and Human Sciences in Warsaw., vol. 10(2), June.
    2. Isaac Koomson & Raymond Elikplim Kofinti & Esther Laryea, 2024. "Financial inclusion and multidimensional child poverty," Review of Economics of the Household, Springer, vol. 22(1), pages 237-260, March.
    3. Sun, Sicong & Nabunya, Proscovia & Byansi, William & Sensoy Bahar, Ozge & Damulira, Christopher & Neilands, Torsten B. & Guo, Shenyang & Namuwonge, Flavia & Ssewamala, Fred M., 2020. "Access and utilization of financial services among poor HIV-impacted children and families in Uganda," Children and Youth Services Review, Elsevier, vol. 109(C).
    4. Lehmann, Hartmut & Silvagni, Maria Giulia, 2013. "Is There Convergence of Russia's Regions? Exploring the Empirical Evidence: 1995–2010," IZA Discussion Papers 7603, Institute of Labor Economics (IZA).
    5. Maria Abreu & Henri L.F. de Groot & Raymond J.G.M. Florax, 2005. "A Meta-Analysis of Beta-Convergence: The Legendary Two-Percent," Tinbergen Institute Discussion Papers 05-001/3, Tinbergen Institute.
    6. Perugini, Cristiano, 2020. "Patterns and drivers of household income dynamics in Russia: The role of access to credit," BOFIT Discussion Papers 11/2020, Bank of Finland Institute for Emerging Economies (BOFIT).
    7. Massimiliano Affinito, 2011. "Convergence clubs, the euro-area rank and the relationship between banking and real convergence," Temi di discussione (Economic working papers) 809, Bank of Italy, Economic Research and International Relations Area.
    8. Dalgaard, Carl-Johan & Erickson, Lennart, 2009. "Reasonable Expectations and the First Millennium Development Goal: How Much Can Aid Achieve?," World Development, Elsevier, vol. 37(7), pages 1170-1181, July.
    9. Théophile T. Azomahou & Jalal El Ouardighi & Phu Nguyen Van & Thi Kim Cuong Pham, 2006. "Estimation semi-paramétrique de la convergence des régions européennes," Economie & Prévision, La Documentation Française, vol. 0(2), pages 97-110.
    10. Renata Baborska & Emilio Hernandez & Emiliano Magrini & Cristian Morales-Opazo, 2020. "The impact of financial inclusion on rural food security experience: A perspective from low-and middle-income countries," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 10(2), pages 1-18.
    11. Oleg Badunenko & Daniel Henderson & Romain Houssa, 2014. "Significant drivers of growth in Africa," Journal of Productivity Analysis, Springer, vol. 42(3), pages 339-354, December.
    12. Måns Söderbom & Francis Teal, 2003. "Openness and human capital as sources of productivity growth: An empirical investigation," CSAE Working Paper Series 2003-06, Centre for the Study of African Economies, University of Oxford.
    13. Grohmann, Antonia & Klühs, Theres & Menkhoff, Lukas, 2018. "Does financial literacy improve financial inclusion? Cross country evidence," World Development, Elsevier, vol. 111(C), pages 84-96.
    14. Mirpourian, Mehrdad, 2020. "A Gendered Look at Savings Behavior among Nigerian Microsavers," MPRA Paper 103062, University Library of Munich, Germany.
    15. Kornher, Lukas & Kalkuhl, Matthias, 2013. "Food Price Volatility in Developing Countries and its Determinants," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 52(4), pages 1-32, November.
    16. Fadzlan Sufian & Muzafar Shah Habibullah, 2010. "Bank-specific, Industry-specific and Macroeconomic Determinants of Bank Efficiency," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 4(4), pages 427-461, November.
    17. Indunil De Silva & Sudarno Sumarto, 2015. "Dynamics Of Growth, Poverty And Human Capital: Evidence From Indonesian Sub-National Data," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 40(2), pages 1-33, June.
    18. Cem Ertur & Wilfried Koch, 2006. "The Role of Human Capital and Technological Interdependence in Growth and Convergence Processes: International Evidence," DEGIT Conference Papers c011_029, DEGIT, Dynamics, Economic Growth, and International Trade.
    19. Mirpourian, Mehrdad, 2020. "A Gendered Look at Savings Behavior among Nigerian Microsavers," MPRA Paper 103221, University Library of Munich, Germany.
    20. Vernon Loke & Laura Choi & Margaret Libby, 2015. "Increasing Youth Financial Capability: An Evaluation of the MyPath Savings Initiative," Journal of Consumer Affairs, Wiley Blackwell, vol. 49(1), pages 97-126, March.

    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:spr:qualqt:v:51:y:2017:i:4:d:10.1007_s11135-016-0342-1. 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    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.