Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?

This paper addresses whether microcredit participants in Bangladesh are trapped in poverty and debt, as many critics have argued in recent years. Analysis of data from a long panel survey over a 20-year period confirms this is not the case, althoug...

Full description

Bibliographic Details
Main Authors:	Khandker, Shahidur R., Samad, Hussain A.
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2013
Subjects:	AMOUNT OF LOAN ASSET HOLDINGS ASSET RATIO ASSET RATIOS ASSET VALUE AVERAGE DEBT BANK LOANS BANK POLICY BANK RATE BENEFICIARIES BIDS BORROWER BORROWING COMMERCIAL BANK COMMERCIAL BANKS CONSUMER GOODS CONSUMPTION EXPENDITURE CREDIT ACCESS CREDIT SCORING CROP PRODUCTION DEBT DEBT SERVICING DEMAND FOR CREDIT DEPOSITS DUE DILIGENCE ECONOMETRIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICIES EMPLOYMENT EXPERIMENTAL DESIGN EXTREME POVERTY FARM ACTIVITIES FARM SECTOR FEMALE PARTICIPATION FINANCIAL ASSETS FINANCIAL INSTITUTIONS FOOD BASKET FOOD CONSUMPTION FOOD EXPENDITURE FOOD EXPENDITURES FOOD ITEMS FOOD POLICY FOOD POVERTY FOOD POVERTY LINE GENDER DISPARITY GLOBAL POVERTY GROUP LENDING HOUSEHOLD HEAD HOUSEHOLD INCOME HOUSEHOLD PARTICIPATION HUMAN CAPITAL HUMAN CAPITAL INVESTMENT HUMAN DEVELOPMENT IMPACT EVALUATION INCOME INCOME GENERATION INDEBTED HOUSEHOLDS INDEBTEDNESS INEQUALITY INFORMAL LENDERS INTEREST RATES INTERNATIONAL BANK INTERVENTION LAND ASSET LAND ASSETS LAND VALUE LANDHOLDINGS LEARNING LENDERS LIABILITY LIVING STANDARDS LOAN LOAN AMOUNTS LOAN PORTFOLIO LONGITUDINAL DATA MEAT MICROCREDIT MICROCREDIT PROGRAMS MICROENTERPRISE CREDIT MICROFINANCE MICROFINANCE INSTITUTIONS MILK NONFARM INCOME NUTRITION PENSIONS PER CAPITA INCOME PERFORMANCE INDICATORS POLITICAL ECONOMY POOR POOR HOUSEHOLDS POVERTY ALLEVIATION POVERTY DYNAMICS POVERTY LINE POVERTY RATES POVERTY REDUCTION POVERTY STATUS PROGRAM EFFECTS RATES OF RETURN REDUCTION IN POVERTY REMITTANCES REORGANIZATION RETURNS RURAL RURAL AREAS RURAL COMMUNITIES RURAL CREDIT RURAL DEVELOPMENT RURAL HOUSEHOLDS RURAL POVERTY SAMPLE SIZE SAVINGS SAVINGS ACCOUNT SCHOOL ATTENDANCE SCHOOLING SELECTION BIAS SELF-EMPLOYMENT SOLVENCY STOCKS TOTAL DEBT TRANSACTION TRANSPORT TREATMENT EFFECTS VEGETABLES VILLAGE FUND VILLAGE LEVEL VULNERABLE GROUPS WAGE EMPLOYMENT WAGES WELFARE INDICATOR WELFARE MEASURES
Online Access:	http://documents.worldbank.org/curated/en/2013/04/17550228/microcredit-participants-bangladesh-trapped-poverty-debt http://hdl.handle.net/10986/13125

id	okr-10986-13125
recordtype	oai_dc
spelling	okr-10986-131252021-04-23T14:03:07Z Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt? Khandker, Shahidur R. Samad, Hussain A. AMOUNT OF LOAN ASSET HOLDINGS ASSET RATIO ASSET RATIOS ASSET VALUE AVERAGE DEBT BANK LOANS BANK POLICY BANK RATE BENEFICIARIES BIDS BORROWER BORROWING COMMERCIAL BANK COMMERCIAL BANKS CONSUMER GOODS CONSUMPTION EXPENDITURE CREDIT ACCESS CREDIT SCORING CROP PRODUCTION DEBT DEBT SERVICING DEMAND FOR CREDIT DEPOSITS DUE DILIGENCE ECONOMETRIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICIES EMPLOYMENT EXPERIMENTAL DESIGN EXTREME POVERTY FARM ACTIVITIES FARM SECTOR FEMALE PARTICIPATION FINANCIAL ASSETS FINANCIAL INSTITUTIONS FOOD BASKET FOOD CONSUMPTION FOOD EXPENDITURE FOOD EXPENDITURES FOOD ITEMS FOOD POLICY FOOD POVERTY FOOD POVERTY LINE GENDER DISPARITY GLOBAL POVERTY GROUP LENDING HOUSEHOLD HEAD HOUSEHOLD INCOME HOUSEHOLD PARTICIPATION HUMAN CAPITAL HUMAN CAPITAL INVESTMENT HUMAN DEVELOPMENT IMPACT EVALUATION INCOME INCOME GENERATION INDEBTED HOUSEHOLDS INDEBTEDNESS INEQUALITY INFORMAL LENDERS INTEREST RATES INTERNATIONAL BANK INTERVENTION LAND ASSET LAND ASSETS LAND VALUE LANDHOLDINGS LEARNING LENDERS LIABILITY LIVING STANDARDS LOAN LOAN AMOUNTS LOAN PORTFOLIO LONGITUDINAL DATA MEAT MICROCREDIT MICROCREDIT PROGRAMS MICROENTERPRISE CREDIT MICROFINANCE MICROFINANCE INSTITUTIONS MILK NONFARM INCOME NUTRITION PENSIONS PER CAPITA INCOME PERFORMANCE INDICATORS POLITICAL ECONOMY POOR POOR HOUSEHOLDS POVERTY ALLEVIATION POVERTY DYNAMICS POVERTY LINE POVERTY RATES POVERTY REDUCTION POVERTY STATUS PROGRAM EFFECTS RATES OF RETURN REDUCTION IN POVERTY REMITTANCES REORGANIZATION RETURNS RURAL RURAL AREAS RURAL COMMUNITIES RURAL CREDIT RURAL DEVELOPMENT RURAL HOUSEHOLDS RURAL POVERTY SAMPLE SIZE SAVINGS SAVINGS ACCOUNT SCHOOL ATTENDANCE SCHOOLING SELECTION BIAS SELF-EMPLOYMENT SOLVENCY STOCKS TOTAL DEBT TRANSACTION TRANSPORT TREATMENT EFFECTS VEGETABLES VILLAGE FUND VILLAGE LEVEL VULNERABLE GROUPS WAGE EMPLOYMENT WAGES WELFARE INDICATOR WELFARE MEASURES This paper addresses whether microcredit participants in Bangladesh are trapped in poverty and debt, as many critics have argued in recent years. Analysis of data from a long panel survey over a 20-year period confirms this is not the case, although numerous participants have been with microcredit programs for many years. The results of the analysis suggest that participants derive a variety of benefits from microcredit: It helps them to earn income and consume more, accumulate assets, invest in children's schooling, and be lifted out of poverty. This is not to say that non-participants have failed to progress over the same period. Both participants and non-participants have gained as the economy has grown; however, the rates of poverty reduction have been higher for participants. Testing the net effect of microcredit programs requires applying an econometric method that controls for why some households participated and others did not, conditional on their initial characteristics. In addition, the method must control for time-varying, unobserved heterogeneity that affects everyone over time, albeit in possibly different ways. The paper's econometric estimates show significant welfare gains resulting from microcredit participation, especially for women. They also show that the accrued benefits of borrowing outweigh accumulated debt. As a result, households' net worth has increased, and both poverty and the debt-asset ratio have declined. 2013-04-10T18:16:42Z 2013-04-10T18:16:42Z 2013-04 http://documents.worldbank.org/curated/en/2013/04/17550228/microcredit-participants-bangladesh-trapped-poverty-debt http://hdl.handle.net/10986/13125 English en_US Policy Research working paper;no. WPS 6404 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
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	AMOUNT OF LOAN ASSET HOLDINGS ASSET RATIO ASSET RATIOS ASSET VALUE AVERAGE DEBT BANK LOANS BANK POLICY BANK RATE BENEFICIARIES BIDS BORROWER BORROWING COMMERCIAL BANK COMMERCIAL BANKS CONSUMER GOODS CONSUMPTION EXPENDITURE CREDIT ACCESS CREDIT SCORING CROP PRODUCTION DEBT DEBT SERVICING DEMAND FOR CREDIT DEPOSITS DUE DILIGENCE ECONOMETRIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICIES EMPLOYMENT EXPERIMENTAL DESIGN EXTREME POVERTY FARM ACTIVITIES FARM SECTOR FEMALE PARTICIPATION FINANCIAL ASSETS FINANCIAL INSTITUTIONS FOOD BASKET FOOD CONSUMPTION FOOD EXPENDITURE FOOD EXPENDITURES FOOD ITEMS FOOD POLICY FOOD POVERTY FOOD POVERTY LINE GENDER DISPARITY GLOBAL POVERTY GROUP LENDING HOUSEHOLD HEAD HOUSEHOLD INCOME HOUSEHOLD PARTICIPATION HUMAN CAPITAL HUMAN CAPITAL INVESTMENT HUMAN DEVELOPMENT IMPACT EVALUATION INCOME INCOME GENERATION INDEBTED HOUSEHOLDS INDEBTEDNESS INEQUALITY INFORMAL LENDERS INTEREST RATES INTERNATIONAL BANK INTERVENTION LAND ASSET LAND ASSETS LAND VALUE LANDHOLDINGS LEARNING LENDERS LIABILITY LIVING STANDARDS LOAN LOAN AMOUNTS LOAN PORTFOLIO LONGITUDINAL DATA MEAT MICROCREDIT MICROCREDIT PROGRAMS MICROENTERPRISE CREDIT MICROFINANCE MICROFINANCE INSTITUTIONS MILK NONFARM INCOME NUTRITION PENSIONS PER CAPITA INCOME PERFORMANCE INDICATORS POLITICAL ECONOMY POOR POOR HOUSEHOLDS POVERTY ALLEVIATION POVERTY DYNAMICS POVERTY LINE POVERTY RATES POVERTY REDUCTION POVERTY STATUS PROGRAM EFFECTS RATES OF RETURN REDUCTION IN POVERTY REMITTANCES REORGANIZATION RETURNS RURAL RURAL AREAS RURAL COMMUNITIES RURAL CREDIT RURAL DEVELOPMENT RURAL HOUSEHOLDS RURAL POVERTY SAMPLE SIZE SAVINGS SAVINGS ACCOUNT SCHOOL ATTENDANCE SCHOOLING SELECTION BIAS SELF-EMPLOYMENT SOLVENCY STOCKS TOTAL DEBT TRANSACTION TRANSPORT TREATMENT EFFECTS VEGETABLES VILLAGE FUND VILLAGE LEVEL VULNERABLE GROUPS WAGE EMPLOYMENT WAGES WELFARE INDICATOR WELFARE MEASURES
spellingShingle	AMOUNT OF LOAN ASSET HOLDINGS ASSET RATIO ASSET RATIOS ASSET VALUE AVERAGE DEBT BANK LOANS BANK POLICY BANK RATE BENEFICIARIES BIDS BORROWER BORROWING COMMERCIAL BANK COMMERCIAL BANKS CONSUMER GOODS CONSUMPTION EXPENDITURE CREDIT ACCESS CREDIT SCORING CROP PRODUCTION DEBT DEBT SERVICING DEMAND FOR CREDIT DEPOSITS DUE DILIGENCE ECONOMETRIC ANALYSIS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMIC POLICIES EMPLOYMENT EXPERIMENTAL DESIGN EXTREME POVERTY FARM ACTIVITIES FARM SECTOR FEMALE PARTICIPATION FINANCIAL ASSETS FINANCIAL INSTITUTIONS FOOD BASKET FOOD CONSUMPTION FOOD EXPENDITURE FOOD EXPENDITURES FOOD ITEMS FOOD POLICY FOOD POVERTY FOOD POVERTY LINE GENDER DISPARITY GLOBAL POVERTY GROUP LENDING HOUSEHOLD HEAD HOUSEHOLD INCOME HOUSEHOLD PARTICIPATION HUMAN CAPITAL HUMAN CAPITAL INVESTMENT HUMAN DEVELOPMENT IMPACT EVALUATION INCOME INCOME GENERATION INDEBTED HOUSEHOLDS INDEBTEDNESS INEQUALITY INFORMAL LENDERS INTEREST RATES INTERNATIONAL BANK INTERVENTION LAND ASSET LAND ASSETS LAND VALUE LANDHOLDINGS LEARNING LENDERS LIABILITY LIVING STANDARDS LOAN LOAN AMOUNTS LOAN PORTFOLIO LONGITUDINAL DATA MEAT MICROCREDIT MICROCREDIT PROGRAMS MICROENTERPRISE CREDIT MICROFINANCE MICROFINANCE INSTITUTIONS MILK NONFARM INCOME NUTRITION PENSIONS PER CAPITA INCOME PERFORMANCE INDICATORS POLITICAL ECONOMY POOR POOR HOUSEHOLDS POVERTY ALLEVIATION POVERTY DYNAMICS POVERTY LINE POVERTY RATES POVERTY REDUCTION POVERTY STATUS PROGRAM EFFECTS RATES OF RETURN REDUCTION IN POVERTY REMITTANCES REORGANIZATION RETURNS RURAL RURAL AREAS RURAL COMMUNITIES RURAL CREDIT RURAL DEVELOPMENT RURAL HOUSEHOLDS RURAL POVERTY SAMPLE SIZE SAVINGS SAVINGS ACCOUNT SCHOOL ATTENDANCE SCHOOLING SELECTION BIAS SELF-EMPLOYMENT SOLVENCY STOCKS TOTAL DEBT TRANSACTION TRANSPORT TREATMENT EFFECTS VEGETABLES VILLAGE FUND VILLAGE LEVEL VULNERABLE GROUPS WAGE EMPLOYMENT WAGES WELFARE INDICATOR WELFARE MEASURES Khandker, Shahidur R. Samad, Hussain A. Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?
geographic_facet	South Asia Bangladesh
relation	Policy Research working paper;no. WPS 6404
description	This paper addresses whether microcredit participants in Bangladesh are trapped in poverty and debt, as many critics have argued in recent years. Analysis of data from a long panel survey over a 20-year period confirms this is not the case, although numerous participants have been with microcredit programs for many years. The results of the analysis suggest that participants derive a variety of benefits from microcredit: It helps them to earn income and consume more, accumulate assets, invest in children's schooling, and be lifted out of poverty. This is not to say that non-participants have failed to progress over the same period. Both participants and non-participants have gained as the economy has grown; however, the rates of poverty reduction have been higher for participants. Testing the net effect of microcredit programs requires applying an econometric method that controls for why some households participated and others did not, conditional on their initial characteristics. In addition, the method must control for time-varying, unobserved heterogeneity that affects everyone over time, albeit in possibly different ways. The paper's econometric estimates show significant welfare gains resulting from microcredit participation, especially for women. They also show that the accrued benefits of borrowing outweigh accumulated debt. As a result, households' net worth has increased, and both poverty and the debt-asset ratio have declined.
format	Publications & Research :: Policy Research Working Paper
author	Khandker, Shahidur R. Samad, Hussain A.
author_facet	Khandker, Shahidur R. Samad, Hussain A.
author_sort	Khandker, Shahidur R.
title	Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?
title_short	Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?
title_full	Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?
title_fullStr	Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?
title_full_unstemmed	Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?
title_sort	are microcredit participants in bangladesh trapped in poverty and debt?
publisher	World Bank, Washington, DC
publishDate	2013
url	http://documents.worldbank.org/curated/en/2013/04/17550228/microcredit-participants-bangladesh-trapped-poverty-debt http://hdl.handle.net/10986/13125
_version_	1764422768329228288

Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?

Similar Items