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Impact of Rural Credit on Household Welfare: Evidence from a Long-Term Panel in Bangladesh

Author

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  • MD. ALAMGIR HOSSAIN

    (Bangladesh Bank, Dhaka, Bangladesh)

  • MOHAMMAD ABDUL MALEK

    (Faculty of Humanities and Social Science, University of Tsukuba, Ibaraki, Japan)

  • ZHENGFEI YU

    (Graduate School of Humanities and Social Science, University of Tsukuba, Ibaraki, Japan)

Abstract

Using 791 consistent households in the balanced panel, comprising 3,985 households in the unbalanced panel–from a nationally representative, multipurpose, five-round (1988, 2000, 2004, 2008, and 2014) Mahabub Hossain Panel Data in Bangladesh—we provide evidence for the long-term impact of different rural credit sources—which include formal banks, quasiformal microfinance institutes, and informal channels—on household welfare indicators. We find that the long-term impact of access to rural credit on a few welfare indicators is statistically insignificant and sometimes negative. This finding mostly holds when we investigate the impact of different rural credit sources separately. Our results raise a question on the progressive lending of some credit sources, especially microfinance institutes, and have implications for the introduction of nationwide credit bureaus in Bangladesh.

Suggested Citation

  • Md. Alamgir Hossain & Mohammad Abdul Malek & Zhengfei Yu, 2023. "Impact of Rural Credit on Household Welfare: Evidence from a Long-Term Panel in Bangladesh," Asian Development Review (ADR), World Scientific Publishing Co. Pte. Ltd., vol. 40(02), pages 363-397, September.
    • Handle: RePEc:wsi:adrxxx:v:40:y:2023:i:02:n:s0116110523500166
    DOI: 10.1142/S0116110523500166
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    1. Malek, Mohammad Abdul & Kikkawa, Aiko & Azad, Abul Kalam & Sawada, Yasuyuki, 2022. "Rural Development in Bangladesh Over Four Decades: Findings from Mahabub Hossain Panel Data and the Way Forward," ADBI Working Papers 1350, Asian Development Bank Institute.

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    More about this item

    Keywords

    economic welfare; long-term impact; panel data; rural credit sources; rural households;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance

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