Does Microcredit Reach the Poor and Vulnerable? Evidence from Nothern Bangladesh
AbstractSubsidized loans have a history of being diverted to the rich. Yet recently microcredit programs, such as the Grameen Bank in Bangladesh, have become popular among donors and governments as a way to channel funds to the poor. This paper uses a unique panel dataset from two Bangladeshi villages to test if the modern microcredit movement is different from its predecessors. Poverty is measured by levels of consumption. Vulnerability is measured as fluctuations in consumption associated with inefficient risk sharing. We find that subsidized credit is largely successful at reaching the poor and vulnerable. The probability that a microcredit member is below the poverty line is substantially higher than that of a randomly picked household in both villages. In the village where female headed households were found to be vulnerable, nearly half of the female headed households belonged to microcredit programs yet only a quarter of male headed households were microcredit members. While restricting loans to the landless is not effective in reaching the poor and vulnerable, targeting female headed households is.
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Bibliographic InfoPaper provided by Chicago - Graduate School of Business in its series Papers with number 28.
Length: 55 pages
Date of creation: 2000
Date of revision:
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Postal: UNIVERSITY OF CHICAGO, H.G.B. ALEXANDER FOUNDATION GRADUATE SCHOOL OF BUSINESS, CHICAGO ILLINOIS 60637 U.S.A.
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MICROCREDIT ; POVERTY;
Other versions of this item:
- Amin, Sajeda & Rai, Ashok S. & Topa, Giorgio, 2003. "Does microcredit reach the poor and vulnerable? Evidence from northern Bangladesh," Journal of Development Economics, Elsevier, vol. 70(1), pages 59-82, February.
- Sajeda Amin & Ashok S. Rai & Giorgio Topa, 1999. "Does Microcredit Reach the Poor and Vulnerable? Evidence from Northern Bangladesh," CID Working Papers 28, Center for International Development at Harvard University.
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
- I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
- Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
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