Dynamic Effects of Microcredit in Bangladesh
This paper uses long panel survey data spanning over 20 years to examine the dynamics of microcredit programs in Bangladesh. With the phenomenal growth of microfinance institutions representing 30 million members with over $2 billion of annual disb...
| Main Authors: | , |
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| Format: | Policy Research Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2014
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2014/03/19304457/dynamic-effects-microcredit-bangladesh http://hdl.handle.net/10986/18126 |
| Summary: | This paper uses long panel survey data
spanning over 20 years to examine the dynamics of
microcredit programs in Bangladesh. With the phenomenal
growth of microfinance institutions representing 30 million
members with over $2 billion of annual disbursement over the
past two decades, it is important to understand the dynamics
of microcredit expansion and its induced impact on household
welfare. A dynamic panel model is used to address a number
of issues, such as whether credit effects are declining over
time, whether market saturation and village diseconomies are
taking place, and whether multiple program membership, which
is rising as a consequence of microcredit expansion, is
harming or benefiting the borrowers. The paper's
results confirm that microcredit programs have continued to
benefit the poor by raising household welfare. The
beneficial effects have also remained higher for female than
male borrowers. There are diseconomies of scale caused by
higher levels of village-level borrowing, especially for
male members. Multiple program membership is also growing
with competition from microfinance institutions, but this
has rather helped raise assets and net worth more than it
has contributed to indebtedness. |
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