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The Effect of Non-agricultural Selfemployment Credit on Contractual Relations and Employment in Agriculture: The Case of Microcredit Programmes in Bangladesh

Author

Listed:
  • Pitt , Mark M.

    (Senior Economist in the World Bank Institute and Development Research Group of the World Bank)

Abstract

Microfinance provides an alternative source of finance to the poor and women, who, if without access to formal banks, have access to a variety of informal lenders. As microfinance is relatively cheaper than informal finance, access to microfinance is expected to reduce household borrowing from informal sources. Microfinance is also expected to increase household savings by providing an alternative facility for savings mobilization from the poor. An econometric analysis of household survey data from Bangladesh shows that micro-borrowing has indeed reduced borrowing from informal sources, thereby demonstrating microfinance as an effective alternative source of finance to the poor. Micro-borrowing is also found to increase voluntary savings, thus assuring that an appropriate facility can raise household savings even in a poor country such as Bangladesh. Of course, impacts of microfinance vary by the gender of borrowers. The savings impact of micro-borrowing is more pronounced for women than for men. In contrast, the informal finance impact is more pronounced for men than for women.

Suggested Citation

  • Pitt , Mark M., 2000. "The Effect of Non-agricultural Selfemployment Credit on Contractual Relations and Employment in Agriculture: The Case of Microcredit Programmes in Bangladesh," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 26(2-3), pages 15-48, June-Sept.
  • Handle: RePEc:ris:badest:0396
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    Citations

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    Cited by:

    1. Tuihedur Rahman, H.M. & Robinson, Brian E. & Ford, James D. & Hickey, Gordon M., 2018. "How Do Capital Asset Interactions Affect Livelihood Sensitivity to Climatic Stresses? Insights From the Northeastern Floodplains of Bangladesh," Ecological Economics, Elsevier, vol. 150(C), pages 165-176.
    2. Mst Tania Parvin & Kanij Fatema & Sadika Haque, 2021. "Factors Determining the Credit Accessibility by the Small-Scale Entrepreneurs: A Case of Handloom Weaving in Bangladesh," International Journal of Business and Management, Canadian Center of Science and Education, vol. 15(8), pages 1-93, July.

    More about this item

    Keywords

    Microcredit; Microfinance; Land ownership; Savings; Bank loans;
    All these keywords.

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines

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