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Impact of microcredit on borrowers’ expenditures: a fuzzy regression discontinuity design approach

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  • Khondker Aktaruzzaman
  • Omar Farooq

Abstract

This article uses the data from 69 villages in Bangladesh to estimate the effect of participation in microcredit programmes on household expenditures. A regression discontinuity design (RDD) is used to identify the credit effect. Our results show heterogeneous treatment effect on different types of expenditures. We show that access to credit reduces per capita expenditure on durable goods such as kitchen equipment, furniture, repair and maintenance of house and increases the expenditure on per school-going child. We also show insignificant impact of access to credit on non-durable goods and health care, recreation and gifts. Interestingly, our results indicate a positive impact of microcredit on village-level expenditures.

Suggested Citation

  • Khondker Aktaruzzaman & Omar Farooq, 2016. "Impact of microcredit on borrowers’ expenditures: a fuzzy regression discontinuity design approach," Applied Economics, Taylor & Francis Journals, vol. 48(38), pages 3685-3694, August.
    • Handle: RePEc:taf:applec:v:48:y:2016:i:38:p:3685-3694
    DOI: 10.1080/00036846.2016.1142662
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    1. repec:pri:rpdevs:morduch_microfinance_poor is not listed on IDEAS
    2. Jonathan Morduch, 1998. "Does Microfinance Really Help the Poor? New Evidence from Flagship Programs in Bangladesh," Working Papers 198, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
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