Microfinance and Household Poverty Reduction: New evidence from India
The objective of the present study is to examine whether household access to microfinance reduces poverty. Using national household data from India, treatment effects model is employed to estimate the poverty-reducing effects of MFIs loans for productive purposes, such as investment in agriculture or non-farm businesses on household poverty levels. These models take into account the endogenous binary treatment effects and sample selection bias associated with access to MFIs. Despite some limitations, such as those arising from potential unobservable important determinants of access to MFIs, significant positive effect of MFI productive loans on multidimensional welfare indicator has been confirmed. The significance of treatment "effects" coefficients have been verified by both Tobit and Propensity Score Matching models. In addition, we found that loans for productive purposes were more important for poverty reduction in rural than in urban areas. However in urban areas, simple access to MFIs has larger average poverty-reducing effects than the access to loans from MFIs for productive purposes. This leads to exploring service delivery opportunities that provide an additional avenue to monitor the usage of loans to enhance the outreach.
|Date of creation:||Apr 2010|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +81-(0)78 803 7036
Fax: +81-(0)78 803 7059
Web page: http://www.rieb.kobe-u.ac.jp/index-e.html
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- P. Mosley, 2001. "Microfinance and Poverty in Bolivia," Journal of Development Studies, Taylor & Francis Journals, vol. 37(4), pages 101-132.
- Amemiya, Takeshi, 1984. "Tobit models: A survey," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 3-61.
- Menno Pradhan & Martin Ravallion, 2000. "Measuring Poverty Using Qualitative Perceptions Of Consumption Adequacy," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 462-471, August.
- Heckman, James, 2013.
"Sample selection bias as a specification error,"
Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
- Khandker, Shahidur R., 2003.
"Microfinance and poverty - evidence using panel data from Bangladesh,"
Policy Research Working Paper Series
2945, The World Bank.
- Shahidur R. Khandker, 2005. "Microfinance and Poverty: Evidence Using Panel Data from Bangladesh," World Bank Economic Review, World Bank Group, vol. 19(2), pages 263-286.
- Basu, Priya & Srivastava, Pradeep, 2005. "Scaling-up microfinance for India's rural poor," Policy Research Working Paper Series 3646, The World Bank.
- Suresh Sundaresan (ed.), 2008. "Microfinance," Books, Edward Elgar, number 13148, 6.
- John Weiss & Heather Montgomery, 2005.
"Great Expectations: Microfinance and Poverty Reduction in Asia and Latin America,"
Oxford Development Studies,
Taylor & Francis Journals, vol. 33(3-4), pages 391-416.
- Weiss, John & Montgomery, Heather, 2004. "Great expectations: microfinance and poverty reduction in Asia and Latin America," MPRA Paper 33142, University Library of Munich, Germany.
- Angus Deaton & Valerie Kozel, 2005. "Data and Dogma: The Great Indian Poverty Debate," World Bank Research Observer, World Bank Group, vol. 20(2), pages 177-199.
- Adams, Alayne M. & Evans, Timothy G. & Mohammed, Rafi & Farnsworth, Jennifer, 1997. "Socioeconomic stratification by wealth ranking: Is it valid?," World Development, Elsevier, vol. 25(7), pages 1165-1172, July.
- Cull, Robert & Demirguc-Kunt, Asli & Morduch, Jonathan, 2008.
"Microfinance meets the market,"
Policy Research Working Paper Series
4630, The World Bank.
- Katsushi Imai & Thankom Arun, 2008. "Does Microfinance Reduce Poverty in India?," The School of Economics Discussion Paper Series 0814, Economics, The University of Manchester.
When requesting a correction, please mention this item's handle: RePEc:kob:dpaper:dp2010-14. 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: (Office of Promoting Research Collaboration, Research Institute for Economics & Business Administration, Kobe University)
If references are entirely missing, you can add them using this form.