Household and Intrahousehold Impact of the Grameen Bank and Similar Targeted Credit Programs in Bangladesh
Group-based lending programs for the poor have become a focus of attention in the development community over the last several years. To date, there has been no comprehensive investigation of their impact on household behavior that has been sufficiently attentive to issues of endogeneity and self-selection. Perhaps one reason for this is the absence of any data generated from social experiments associated with these credit programs, and from the difficulty in finding valid instrumental variables (exclusion restricted) to deal with the endogeneity bias in non-experimental data. This paper surmounts these issues by treating the choice of participating in credit programs in a sample of Bangladeshi households and villages as corresponding to a "quasi-experiment" conditional on all observed and unobserve characteristics.
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