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Microfinance and poverty - evidence using panel data from Bangladesh

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  • Khandker, Shahidur R.

Abstract

Micro-finance supports mainly informal activities that often have low market demand. It may be thus hypothesized that the aggregate poverty impact of micro-finance in an economy with low economic growth is modest or nonexistent. The observed borrower-level poverty impact is then a result of income redistribution or short-run income generation. The author addresses these questions using household level panel data from Bangladesh. The findings confirm that micro-finance benefits the poorest and has sustained impact in reducing poverty among program participants. It also has positive spillover impact, reducing poverty at the village level. But the effect is more pronounced in reducing extreme rather than moderate poverty.

Suggested Citation

  • Khandker, Shahidur R., 2003. "Microfinance and poverty - evidence using panel data from Bangladesh," Policy Research Working Paper Series 2945, The World Bank.
    • Handle: RePEc:wbk:wbrwps:2945
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    References listed on IDEAS

    as
    1. Adams, Dale W & Von Pischke, J. D., 1992. "Microenterprise credit programs: Deja vu," World Development, Elsevier, vol. 20(10), pages 1463-1470, October.
    2. repec:pri:rpdevs:morduch_microfinance_poor is not listed on IDEAS
    3. Mark M. Pitt & Shahidur R. Khandker, 1998. "The Impact of Group-Based Credit Programs on Poor Households in Bangladesh: Does the Gender of Participants Matter?," Journal of Political Economy, University of Chicago Press, vol. 106(5), pages 958-996, October.
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    Full references (including those not matched with items on IDEAS)

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