Group-Based Financial Institutions For The Rural Poor In Bangladesh: An Institutional- And Household-Level Analysis

In the last two decades, nongovernmental organizations in Bangladesh have provided millions of poor rural people with savings and credit services at low cost. These services have reduced poverty and may have improved food security and nutrition and achieved positive social change as well. The relative success of these microfinance institutions merits an in-depth examination of their structure, conduct, and performance and the role they play in reducing poverty. This report analyzes the fit between the rural poor and three key NGOs that represent the variety of microfinance institutions in Bangladesh. The report evaluates the effects of microfinance credit programs on household resource allocation, income generation, food and non-food consumption, and the social attitudes and capacities of members. It suggests that microfinance institutions should be expanded, but with careful attention to cost and financial sustainability. This report will be of interest to professionals involved in credit, food security, nutrition, food policy, rural development, and social change.