Does Access to Finance Matter in Microenterprise Growth? Evidence from Bangladesh
In less-developed economies such as Bangladesh, the farm sector is the major source of employment and income, while the rural nonfarm sector provides as an additional source of income. But the rural nonfarm sector increasingly plays an important ro...
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
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World Bank, Washington, DC
2013
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| Online Access: | http://documents.worldbank.org/curated/en/2013/01/17196485/access-finance-matter-microenterprise-growth-evidence-bangladesh http://hdl.handle.net/10986/12156 |
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okr-10986-12156 |
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oai_dc |
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Digital Repository |
| institution_category |
Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
ACCESS TO CAPITAL ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO LOANS ACCOUNTING ACTUAL COST AFFILIATED ORGANIZATIONS AGRICULTURAL ACTIVITIES AGRICULTURAL ACTIVITY AGRICULTURAL BANKS AGRICULTURAL ECONOMICS AGRICULTURE BANK LOAN BANK LOAN GUARANTEES BANK LOANS BIDS BORROWER BORROWING CAPITAL ASSETS CAPITAL GRANTS CAPITAL STOCKS CAPITALS COLLATERAL FOR BANK LOAN COMMERCIAL BANK COMMERCIAL BANK LOANS COMMERCIAL BANKS COMMUNITY REINVESTMENT CONSUMER GOODS CONSUMPTION EXPENDITURE CORPORATE FINANCE COST OF CAPITAL COST OF RENT CREDIT ACCESS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT PROGRAM CREDIT PROGRAMS CREDITORS DEPOSITORS DEVELOPING COUNTRIES DEVELOPMENT BANKS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIMINISHING RETURNS DUMMY VARIABLES DURABLE DURABLE GOODS EARNINGS ECONOMETRIC ANALYSIS ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC RESEARCH ELASTICITY EMPLOYMENT OPPORTUNITIES ENTERPRISE GROWTH ENTERPRISE OPERATIONS ENTREPRENEURS ENTREPRENEURSHIP EXOGENOUS VARIABLES EXPECTED RETURN EXPECTED RETURNS EXPENDITURE EXPENDITURES EXTREME POVERTY FARM MACHINERY FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF NEW YORK FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL LITERACY FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FIXED ASSETS FORMAL BANKS FORMAL FINANCIAL INSTITUTIONS GOVERNMENT REGULATIONS GROWTH OPPORTUNITIES GROWTH RATE GROWTH THEORY HOUSEHOLD BUSINESSES HOUSEHOLD INCOME HOUSEHOLD WEALTH HOUSEHOLD WELFARE HOUSEHOLDS HUMAN CAPITAL INCOME GROWTH INDUSTRIALIZATION INFORMAL LENDERS INFORMAL LOANS INHERITANCE INITIAL INVESTMENT INSTALLMENTS INSTITUTIONAL CREDIT INSTITUTIONAL LOANS INTEREST INCOME INTEREST PAYMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVENTORIES INVENTORY INVESTMENT CLIMATE INVESTMENT DECISIONS LABOR MARKETS LACK OF ACCESS LACK OF COLLATERAL LEGAL CONSTRAINTS LENDER LIVING STANDARD LOAN LOAN GUARANTEES LOANS FROM FAMILY LOANS FROM FRIENDS LOCAL GOVERNMENT MARGINAL PRODUCT MARGINAL RATE OF RETURN MFI MFIS MICRO ENTERPRISE MICRO-ENTERPRISE MICRO-ENTERPRISES MICRO-ENTREPRENEUR MICRO-ENTREPRENEURS MICROCREDIT MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTIONS MICROFINANCE SECTOR MONEY LENDERS MONEYLENDERS OPERATING COST OPPORTUNITY COST OUTREACH PAWN PAWN SHOPS PENSION PER CAPITA INCOME PERSONAL SAVINGS PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROFIT MARGIN PROFITABILITY PROPERTY RIGHTS RATE OF RETURN RATES OF INTEREST RATES OF RETURN RATES OF RETURNS REAL ESTATE RECEIPT REGULATORY AUTHORITY REGULATORY BARRIERS REMITTANCE REPAYMENT REPAYMENT SCHEDULE REPAYMENTS RESOURCE ALLOCATION RETAIL TRADING RETURN ON ASSETS ROA SAFETY NET SAVINGS SELF-EMPLOYMENT SMALL LOANS SOURCE OF INCOME SOURCES OF INCOME START-UP START-UP CAPITAL STARTUP CAPITAL SURPLUS LABOR TELECOMMUNICATIONS TELECOMMUNICATIONS EQUIPMENT TRADE SECTOR TRADE SECTORS TRADING TRANSACTION TRANSACTION COSTS TRANSPORT URBAN AREAS VALUE OF ASSETS VARIABLE COSTS VILLAGE VILLAGES VULNERABLE GROUP WORKING CAPITAL |
| spellingShingle |
ACCESS TO CAPITAL ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO LOANS ACCOUNTING ACTUAL COST AFFILIATED ORGANIZATIONS AGRICULTURAL ACTIVITIES AGRICULTURAL ACTIVITY AGRICULTURAL BANKS AGRICULTURAL ECONOMICS AGRICULTURE BANK LOAN BANK LOAN GUARANTEES BANK LOANS BIDS BORROWER BORROWING CAPITAL ASSETS CAPITAL GRANTS CAPITAL STOCKS CAPITALS COLLATERAL FOR BANK LOAN COMMERCIAL BANK COMMERCIAL BANK LOANS COMMERCIAL BANKS COMMUNITY REINVESTMENT CONSUMER GOODS CONSUMPTION EXPENDITURE CORPORATE FINANCE COST OF CAPITAL COST OF RENT CREDIT ACCESS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT PROGRAM CREDIT PROGRAMS CREDITORS DEPOSITORS DEVELOPING COUNTRIES DEVELOPMENT BANKS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIMINISHING RETURNS DUMMY VARIABLES DURABLE DURABLE GOODS EARNINGS ECONOMETRIC ANALYSIS ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC RESEARCH ELASTICITY EMPLOYMENT OPPORTUNITIES ENTERPRISE GROWTH ENTERPRISE OPERATIONS ENTREPRENEURS ENTREPRENEURSHIP EXOGENOUS VARIABLES EXPECTED RETURN EXPECTED RETURNS EXPENDITURE EXPENDITURES EXTREME POVERTY FARM MACHINERY FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF NEW YORK FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL LITERACY FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FIXED ASSETS FORMAL BANKS FORMAL FINANCIAL INSTITUTIONS GOVERNMENT REGULATIONS GROWTH OPPORTUNITIES GROWTH RATE GROWTH THEORY HOUSEHOLD BUSINESSES HOUSEHOLD INCOME HOUSEHOLD WEALTH HOUSEHOLD WELFARE HOUSEHOLDS HUMAN CAPITAL INCOME GROWTH INDUSTRIALIZATION INFORMAL LENDERS INFORMAL LOANS INHERITANCE INITIAL INVESTMENT INSTALLMENTS INSTITUTIONAL CREDIT INSTITUTIONAL LOANS INTEREST INCOME INTEREST PAYMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVENTORIES INVENTORY INVESTMENT CLIMATE INVESTMENT DECISIONS LABOR MARKETS LACK OF ACCESS LACK OF COLLATERAL LEGAL CONSTRAINTS LENDER LIVING STANDARD LOAN LOAN GUARANTEES LOANS FROM FAMILY LOANS FROM FRIENDS LOCAL GOVERNMENT MARGINAL PRODUCT MARGINAL RATE OF RETURN MFI MFIS MICRO ENTERPRISE MICRO-ENTERPRISE MICRO-ENTERPRISES MICRO-ENTREPRENEUR MICRO-ENTREPRENEURS MICROCREDIT MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTIONS MICROFINANCE SECTOR MONEY LENDERS MONEYLENDERS OPERATING COST OPPORTUNITY COST OUTREACH PAWN PAWN SHOPS PENSION PER CAPITA INCOME PERSONAL SAVINGS PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROFIT MARGIN PROFITABILITY PROPERTY RIGHTS RATE OF RETURN RATES OF INTEREST RATES OF RETURN RATES OF RETURNS REAL ESTATE RECEIPT REGULATORY AUTHORITY REGULATORY BARRIERS REMITTANCE REPAYMENT REPAYMENT SCHEDULE REPAYMENTS RESOURCE ALLOCATION RETAIL TRADING RETURN ON ASSETS ROA SAFETY NET SAVINGS SELF-EMPLOYMENT SMALL LOANS SOURCE OF INCOME SOURCES OF INCOME START-UP START-UP CAPITAL STARTUP CAPITAL SURPLUS LABOR TELECOMMUNICATIONS TELECOMMUNICATIONS EQUIPMENT TRADE SECTOR TRADE SECTORS TRADING TRANSACTION TRANSACTION COSTS TRANSPORT URBAN AREAS VALUE OF ASSETS VARIABLE COSTS VILLAGE VILLAGES VULNERABLE GROUP WORKING CAPITAL Khandker, Shahidur R. Samad, Hussain A. Ali, Rubaba Does Access to Finance Matter in Microenterprise Growth? Evidence from Bangladesh |
| geographic_facet |
South Asia Bangladesh |
| relation |
Policy Research Working Paper; No. 6333 |
| description |
In less-developed economies such as
Bangladesh, the farm sector is the major source of
employment and income, while the rural nonfarm sector
provides as an additional source of income. But the rural
nonfarm sector increasingly plays an important role in
fostering the development of the rural economy. A
significant share of this sector is made up of
microenterprise activities, which requires investment and
access to adequate funds. This paper investigates the role
access to finance plays in promoting the efficiency and
growth of microenterprise activities. The findings suggest
that households engaged in microenterprise activities, in
addition to farm and other nonfarm activities, are much
better off (in terms of income, expenditure and poverty)
than those not engaged in such activities. Fewer than 10
percent of the enterprises have access to institutional
finance (formal banks or microcredit), although the rate of
return on microenterprise investments is more than
sufficient (36 percent per year) to repay institutional
loans. The research suggests that credit constraints may
reduce the enterprises' profit margin by as much as
13.6 percent per year. As the returns to microenterprise
investment are found to be high, microfinance institutions
can play a larger role in supporting microenterprise growth
in Bangladesh. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Khandker, Shahidur R. Samad, Hussain A. Ali, Rubaba |
| author_facet |
Khandker, Shahidur R. Samad, Hussain A. Ali, Rubaba |
| author_sort |
Khandker, Shahidur R. |
| title |
Does Access to Finance Matter in Microenterprise Growth? Evidence from Bangladesh |
| title_short |
Does Access to Finance Matter in Microenterprise Growth? Evidence from Bangladesh |
| title_full |
Does Access to Finance Matter in Microenterprise Growth? Evidence from Bangladesh |
| title_fullStr |
Does Access to Finance Matter in Microenterprise Growth? Evidence from Bangladesh |
| title_full_unstemmed |
Does Access to Finance Matter in Microenterprise Growth? Evidence from Bangladesh |
| title_sort |
does access to finance matter in microenterprise growth? evidence from bangladesh |
| publisher |
World Bank, Washington, DC |
| publishDate |
2013 |
| url |
http://documents.worldbank.org/curated/en/2013/01/17196485/access-finance-matter-microenterprise-growth-evidence-bangladesh http://hdl.handle.net/10986/12156 |
| _version_ |
1764422245498748928 |
| spelling |
okr-10986-121562021-04-23T14:03:06Z Does Access to Finance Matter in Microenterprise Growth? Evidence from Bangladesh Khandker, Shahidur R. Samad, Hussain A. Ali, Rubaba ACCESS TO CAPITAL ACCESS TO FINANCE ACCESS TO FINANCIAL SERVICES ACCESS TO LOANS ACCOUNTING ACTUAL COST AFFILIATED ORGANIZATIONS AGRICULTURAL ACTIVITIES AGRICULTURAL ACTIVITY AGRICULTURAL BANKS AGRICULTURAL ECONOMICS AGRICULTURE BANK LOAN BANK LOAN GUARANTEES BANK LOANS BIDS BORROWER BORROWING CAPITAL ASSETS CAPITAL GRANTS CAPITAL STOCKS CAPITALS COLLATERAL FOR BANK LOAN COMMERCIAL BANK COMMERCIAL BANK LOANS COMMERCIAL BANKS COMMUNITY REINVESTMENT CONSUMER GOODS CONSUMPTION EXPENDITURE CORPORATE FINANCE COST OF CAPITAL COST OF RENT CREDIT ACCESS CREDIT CONSTRAINT CREDIT CONSTRAINTS CREDIT MARKET CREDIT PROGRAM CREDIT PROGRAMS CREDITORS DEPOSITORS DEVELOPING COUNTRIES DEVELOPMENT BANKS DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DIMINISHING RETURNS DUMMY VARIABLES DURABLE DURABLE GOODS EARNINGS ECONOMETRIC ANALYSIS ECONOMIC CRISIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC RESEARCH ELASTICITY EMPLOYMENT OPPORTUNITIES ENTERPRISE GROWTH ENTERPRISE OPERATIONS ENTREPRENEURS ENTREPRENEURSHIP EXOGENOUS VARIABLES EXPECTED RETURN EXPECTED RETURNS EXPENDITURE EXPENDITURES EXTREME POVERTY FARM MACHINERY FEDERAL RESERVE FEDERAL RESERVE BANK FEDERAL RESERVE BANK OF NEW YORK FINANCIAL INSTITUTIONS FINANCIAL INTERMEDIATION FINANCIAL LITERACY FINANCIAL SECTOR FINANCIAL SECTOR DEVELOPMENT FIXED ASSETS FORMAL BANKS FORMAL FINANCIAL INSTITUTIONS GOVERNMENT REGULATIONS GROWTH OPPORTUNITIES GROWTH RATE GROWTH THEORY HOUSEHOLD BUSINESSES HOUSEHOLD INCOME HOUSEHOLD WEALTH HOUSEHOLD WELFARE HOUSEHOLDS HUMAN CAPITAL INCOME GROWTH INDUSTRIALIZATION INFORMAL LENDERS INFORMAL LOANS INHERITANCE INITIAL INVESTMENT INSTALLMENTS INSTITUTIONAL CREDIT INSTITUTIONAL LOANS INTEREST INCOME INTEREST PAYMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVENTORIES INVENTORY INVESTMENT CLIMATE INVESTMENT DECISIONS LABOR MARKETS LACK OF ACCESS LACK OF COLLATERAL LEGAL CONSTRAINTS LENDER LIVING STANDARD LOAN LOAN GUARANTEES LOANS FROM FAMILY LOANS FROM FRIENDS LOCAL GOVERNMENT MARGINAL PRODUCT MARGINAL RATE OF RETURN MFI MFIS MICRO ENTERPRISE MICRO-ENTERPRISE MICRO-ENTERPRISES MICRO-ENTREPRENEUR MICRO-ENTREPRENEURS MICROCREDIT MICROENTERPRISES MICROFINANCE MICROFINANCE INSTITUTIONS MICROFINANCE SECTOR MONEY LENDERS MONEYLENDERS OPERATING COST OPPORTUNITY COST OUTREACH PAWN PAWN SHOPS PENSION PER CAPITA INCOME PERSONAL SAVINGS PRODUCTION FUNCTION PRODUCTIVITY PRODUCTIVITY GROWTH PROFIT MARGIN PROFITABILITY PROPERTY RIGHTS RATE OF RETURN RATES OF INTEREST RATES OF RETURN RATES OF RETURNS REAL ESTATE RECEIPT REGULATORY AUTHORITY REGULATORY BARRIERS REMITTANCE REPAYMENT REPAYMENT SCHEDULE REPAYMENTS RESOURCE ALLOCATION RETAIL TRADING RETURN ON ASSETS ROA SAFETY NET SAVINGS SELF-EMPLOYMENT SMALL LOANS SOURCE OF INCOME SOURCES OF INCOME START-UP START-UP CAPITAL STARTUP CAPITAL SURPLUS LABOR TELECOMMUNICATIONS TELECOMMUNICATIONS EQUIPMENT TRADE SECTOR TRADE SECTORS TRADING TRANSACTION TRANSACTION COSTS TRANSPORT URBAN AREAS VALUE OF ASSETS VARIABLE COSTS VILLAGE VILLAGES VULNERABLE GROUP WORKING CAPITAL In less-developed economies such as Bangladesh, the farm sector is the major source of employment and income, while the rural nonfarm sector provides as an additional source of income. But the rural nonfarm sector increasingly plays an important role in fostering the development of the rural economy. A significant share of this sector is made up of microenterprise activities, which requires investment and access to adequate funds. This paper investigates the role access to finance plays in promoting the efficiency and growth of microenterprise activities. The findings suggest that households engaged in microenterprise activities, in addition to farm and other nonfarm activities, are much better off (in terms of income, expenditure and poverty) than those not engaged in such activities. Fewer than 10 percent of the enterprises have access to institutional finance (formal banks or microcredit), although the rate of return on microenterprise investments is more than sufficient (36 percent per year) to repay institutional loans. The research suggests that credit constraints may reduce the enterprises' profit margin by as much as 13.6 percent per year. As the returns to microenterprise investment are found to be high, microfinance institutions can play a larger role in supporting microenterprise growth in Bangladesh. 2013-01-25T21:50:24Z 2013-01-25T21:50:24Z 2013-01 http://documents.worldbank.org/curated/en/2013/01/17196485/access-finance-matter-microenterprise-growth-evidence-bangladesh http://hdl.handle.net/10986/12156 English en_US Policy Research Working Paper; No. 6333 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia Bangladesh |