The Grameen Bank's success in Bangladesh has made microcredit the hot new idea for reducing poverty. This paper uses panel data from two Bangladeshi villages to test if loan recipients are poorer and more vulnerable than non-recipients. Poverty is measured by levels of consumption. Vulnerablitiy is measured as fluctuations in consumption (associated with inefficient risk sharing). We find that loan recipients are poorer than non-recipients in both villages, but are more vulnerable than non-recipients only in the richer and more diversified village. Though microcredit programs target the landless, there is substantial leakage to the landed. Landlessness is not significangly associated with either poverty or vulnerablitiy, but female headship is. Female headed households may be a more appropriate target group for anti-poverty credit programs.
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Paper provided by C.V. Starr Center for Applied Economics, New York University in its series Working Papers with number
99-06.
Find related papers by JEL classification: O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Semiparametric and Nonparametric Methods
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