IDEAS home Printed from https://ideas.repec.org/a/taf/jdevst/v50y2014i4p583-604.html
   My bibliography  Save this article

The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence

Author

Listed:
  • David Roodman
  • Jonathan Morduch

Abstract

We replicate and reanalyse the most influential study of microcredit impacts (M. M. Pitt & S. R. Khandker's, 'The impact of group-based credit on poor households in Bangladesh: Does the gender of participants matter?', published in the Journal of Political Economy, 106, 1998). That study was celebrated for showing that microcredit reduces poverty, a much hoped for possibility (though one not confirmed by recent randomised controlled trials). We show that the original results on poverty reduction disappear after dropping outliers, or when using a robust linear estimator. Using a new program for estimation of mixed process maximum likelihood models, we show how assumptions critical for the original analysis, such as error normality, are contradicted by the data. We conclude that questions about impact cannot be answered in these data.

Suggested Citation

  • David Roodman & Jonathan Morduch, 2014. "The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence," Journal of Development Studies, Taylor & Francis Journals, vol. 50(4), pages 583-604, April.
  • Handle: RePEc:taf:jdevst:v:50:y:2014:i:4:p:583-604
    DOI: 10.1080/00220388.2013.858122
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/00220388.2013.858122
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Angelucci, Manuela & Karlan, Dean & Zinman, Jonathan, 2013. "Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco," Working Papers 117, Yale University, Department of Economics.
    2. Phillips, Peter C.B., 2006. "A Remark On Bimodality And Weak Instrumentation In Structural Equation Estimation," Econometric Theory, Cambridge University Press, vol. 22(05), pages 947-960, October.
    3. repec:pri:rpdevs:morduch_microfinance_poor is not listed on IDEAS
    4. Orazio Attanasio & Britta Augsburg & Ralph De Haas & Emla Fitzsimons & Heike Harmgart, 2011. "Group lending or individual lending? Evidence from a randomised field experiment in Mongolia," IFS Working Papers W11/20, Institute for Fiscal Studies.
    5. Manuela Angelucci, Dean Karlan, Jonathan Zinman, 2013. "Win Some Lose Some? Evidence from a Randomized Microcredit Program Placement Experiment by Compartamos Banco-Working Paper 330," Working Papers 330, Center for Global Development.
    6. Abhijit Banerjee & Esther Duflo & Rachel Glennerster & Cynthia Kinnan, 2015. "The Miracle of Microfinance? Evidence from a Randomized Evaluation," American Economic Journal: Applied Economics, American Economic Association, vol. 7(1), pages 22-53, January.
    7. 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..
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models; Switching Regression Models; Threshold Regression Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

    Lists

    This item is featured on the following reading lists or Wikipedia pages:
    1. The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence (JDS 2014) in ReplicationWiki

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jdevst:v:50:y:2014:i:4:p:583-604. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: http://www.tandfonline.com/FJDS20 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.