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Limitations Of Microcredit For Promoting Microenterprises In Bangladesh

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  • Mahmudul Alam
  • Rafiqul Islam Molla

Abstract

Microcredit is regarded as a tool for poverty alleviation. A stereotyped delivery system is designed and used for promoting and serving survival- and subsistence-level economic activities, particularly for poor female clients. In Bangladesh its success has raised social expectations as to its potential as also a promoter of microenterprises, which are growth-yielding small businesses beyond subsistence-level economic activity. The field survey shows that about 11.7% of the microcredit borrowers are this kind of potential or growing microentrepreneur. It also shows that microcredit’s standardised delivery system, particularly in respect of gender preference, loan size, loan disbursement, and repayment schedules, is a strong limiting factor in effectively serving the microenterprises, which require a more flexible credit package. Therefore a methodological modification is necessary to accommodate flexibility in the microcredit delivery system.

Suggested Citation

  • Mahmudul Alam & Rafiqul Islam Molla, 2012. "Limitations Of Microcredit For Promoting Microenterprises In Bangladesh," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 57(192), pages 41-54, January –.
    • Handle: RePEc:beo:journl:v:57:y:2012:i:192:p:41-54
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    References listed on IDEAS

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    1. Rafiqul Islam Molla & Md. Mahmudul Alam, 2011. "Microcredit - A More Credible Social than Economic Program in Bangladesh," Economics Bulletin, AccessEcon, vol. 31(2), pages 1095-1104.
    2. Rafiqul Molla & M. Alam & Abu Wahid, 2008. "Questioning Bangladesh's Microcredit," Challenge, Taylor & Francis Journals, vol. 51(6), pages 113-121.
    3. Goetz, Anne Marie & Gupta, Rina Sen, 1996. "Who takes the credit? Gender, power, and control over loan use in rural credit programs in Bangladesh," World Development, Elsevier, vol. 24(1), pages 45-63, January.
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    Cited by:

    1. Abdullah Al Mamun, 2016. "Access to Credit, Education and Entrepreneurial Competencies: A Study among Women Micro-entrepreneurs in Malaysia," Vision, , vol. 20(3), pages 159-168, September.
    2. Hassan, Salwana & Alam, Md. Mahmudul & Rahman3, Rashidah Abdul, 2019. "An Estimation of Market Size for Microfinance: Study on the Urban Microentrepreneurs in Selangor, Malaysia," SocArXiv bkmc6, Center for Open Science.
    3. Yaya Koloma & Zaka Ratsimalahelo, 2015. "Jeunes, accès au microcrédit et performance des microentreprises: une évidence au Mali," Working Papers hal-01377920, HAL.
    4. Md Aslam Mia & V. G. R. Chandran, 2016. "Measuring Financial and Social Outreach Productivity of Microfinance Institutions in Bangladesh," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 127(2), pages 505-527, June.
    5. Md. Mahmudul Alam & Rafiqul Islam Molla, 2012. "Inside Productivity of Microcredit in Bangladesh: A Surgical Analysis," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 2(3), pages 478-490, July.
    6. Kamaluddin, Amrizah & Hadi, Nabawiyah Abdul & Alam, Md. Mahmudul & Adil, Mohamed Azam Mohamed, 2019. "Social Collateral Model for Islamic Microfinance," SocArXiv ya8ft, Center for Open Science.

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    More about this item

    Keywords

    Grameen Bank; microcredit; microenterprise; subsistence; poverty alleviation; stereotype;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O29 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Other

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