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Income and employment effects of micro-credit programmes: Village-level evidence from Bangladesh

Author

Listed:
  • Shahidur Khandker
  • Hussain Samad
  • Zahed Khan

Abstract

Micro-credit programmes, having made their mark in providing credit and other development services to the poor in a non-traditional way, are able to make significant changes in a rural economy. This article attempts to quantify the village-level impacts of the three most important micro-credit programmes of Bangladesh, namely Grameen Bank, Bangladesh Rural Advancement Committee (BRAC), and Bangladesh Rural Development Board's (BRDB) RD-12 project. Descriptive and econometric analyses show that these programmes have positive impacts on income, production, and employment, particularly in the rural non-farm sector. Also, growth in self-employment has been achieved at the expense of wage employment, which implies an increase in rural wages. The article emphasises that an upward shift in the labour demand curve is required for both improved productivity and wage gains on a sustainable basis, which can only be supported through a structural transformation of the rural economy.

Suggested Citation

  • Shahidur Khandker & Hussain Samad & Zahed Khan, 1998. "Income and employment effects of micro-credit programmes: Village-level evidence from Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 35(2), pages 96-124.
  • Handle: RePEc:taf:jdevst:v:35:y:1998:i:2:p:96-124
    DOI: 10.1080/00220389808422566
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    1. repec:spr:decisn:v:44:y:2017:i:3:d:10.1007_s40622-017-0148-6 is not listed on IDEAS
    2. Mosley, Paul & Johnson, Susan & Simanowitz, Anton, 2000. "How Can Impact Assessments Facilitate Stronger Collaboration Between DFOs?," Working Papers 23750, University of Sussex, Imp-Act: Improving the Impact of Microfinance on Poverty: Action Research Program.
    3. Sengsourivong, Kongpasa & Mieno, Fumiharu, 2014. "Impacts of Savings and Credit Union Programs on Household Welfare in Laos: Case Study of the Vientiane Vicinity during the mid-2000s," PRIMCED Discussion Paper Series 55, Institute of Economic Research, Hitotsubashi University.
    4. Paul Mosley & June Rock, 2004. "Microfinance, labour markets and poverty in Africa: a study of six institutions," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(3), pages 467-500.
    5. World Bank, 2013. "Bangladesh - Poverty Assessment : Assessing a Decade of Progress in Reducing Poverty, 2000-2010," World Bank Other Operational Studies 16622, The World Bank.
    6. Iyer, Sriya & Velu, Chander, 2006. "Real options and demographic decisions," Journal of Development Economics, Elsevier, vol. 80(1), pages 39-58, June.
    7. Nidhiya Menon, 2006. "Non-linearities in returns to participation in Grameen Bank programs," Journal of Development Studies, Taylor & Francis Journals, vol. 42(8), pages 1379-1400.
    8. Solava Ibrahim & David Hulme, 2010. "Has civil society helped the poor? - A review of the roles and contributions of civil society to poverty reduction?," Brooks World Poverty Institute Working Paper Series 11410, BWPI, The University of Manchester.
    9. repec:kqi:journl:2017-1-2 is not listed on IDEAS
    10. James C. Brau & Gary M. Woller, 2004. "Microfinance: A Comprehensive Review of the Existing Literature," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 9(1), pages 1-28, Spring.
    11. Frazer, Garth, 2006. "Learning the master's trade: Apprenticeship and human capital in Ghana," Journal of Development Economics, Elsevier, vol. 81(2), pages 259-298, December.
    12. Heriyaldi & Arief Anshory Yusuf, 2013. "Does Micro Finance Institution Improve Welfare? A Double Difference Analysis of Indonesian Community-level Data," Working Papers in Economics and Development Studies (WoPEDS) 201307, Department of Economics, Padjadjaran University, revised Mar 2013.
    13. Todd, Petra E., 2012. "Effectiveness of interventions aimed at improving women's employability and quality of work : a critical review," Policy Research Working Paper Series 6189, The World Bank.
    14. Ulrike Vogelgesang, 2001. "The Impact of Microfinance Loans on the Clients' Enterprises: Caja Los Andes, Bolivia," GK working paper series 2001-03, Post Graduate Programme "Allocation on Financial Markets", University of Mannheim, revised Nov 2001.
    15. World Bank, 2001. "Risk Management in South Asia : A Poverty Focused Approach," World Bank Other Operational Studies 15449, The World Bank.

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