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 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.

Bibliographic Details

Main Authors:	Khandker, Shahidur R., Samad, Hussain A.
Language:	English en_US
Published:	World Bank, Washington, DC 2014-03
Subjects:	ADVERSE EFFECTS, AGRICULTURE, AMOUNT OF CREDIT, ASSET VALUE, ASSETS, ATTRITION, BANK POLICY, BENEFICIAL EFFECTS, BIDS, BORROWER, BORROWING, CASH TRANSFER, COMMERCIAL BANKS, CONSUMER GOODS, CREDIT ACCESS, CREDIT COEFFICIENTS, CREDIT EXPANSION, CREDIT GROUP, CREDIT INCREASES, CREDIT PROGRAMS, CREDIT RISK, CREDIT SCORING, DATA ANALYSIS, DATA COLLECTION, DEBT, DEMAND FOR CREDIT, DEPOSITS, DEVELOPMENT POLICY, DEVELOPMENT RESEARCH, DIMINISHING RETURNS, DISBURSEMENT, DISECONOMIES OF SCALE, DUE DILIGENCE, DUMMY VARIABLE, ECONOMIC DEVELOPMENT, ECONOMIC GROWTH, ELASTICITY, EMPLOYMENT, EXOGENOUS VARIABLES, EXPENDITURE, EXPENDITURES, EXTERNALITIES, EXTERNALITY, EXTREME POVERTY, FEMALE ENTREPRENEURS, FEMALE LABOR, FINANCIAL INSTITUTIONS, FINANCIAL STUDIES, GROUP LENDING, GROWTH RATE, HOUSEHOLD ANALYSIS, HOUSEHOLD INCOME, HUMAN RESOURCES, INCOME, INCREASING RETURNS, INDEBTEDNESS, INFORMAL LENDERS, INSURANCE, INTEREST RATES, INTERNATIONAL BANK, LABOR ECONOMICS, LABOR SUPPLY, LABORERS, LENDER, LOAN, LOAN AMOUNTS, LOAN PORTFOLIO, LOAN RECOVERIES, LOCAL ECONOMIES, LOCAL ECONOMY, LOCAL MARKET, LONG-TERM LOANS, MARKET CONDITIONS, MICRO FINANCE, MICROCREDIT, MICROENTERPRISES, MICROFINANCE, MICROFINANCE INSTITUTIONS, MODELING, NEGATIVE EXTERNALITIES, NEGATIVE EXTERNALITY, PER CAPITA INCOME, POLITICAL ECONOMY, POSITIVE EFFECTS, POSITIVE EXTERNALITIES, POSITIVE EXTERNALITY, PRODUCTIVITY, REGRESSION ANALYSIS, RENTS, REORGANIZATION, RESEARCH WORKING PAPERS, RESEARCHERS, RETURN, SAVINGS, SAVINGS ACCOUNT, SPECIFICATION ERROR, SURVEY DATA, TECHNIQUES, TEST STATISTICS, TRADE SECTOR, TRADING, WAGES, WEALTH, WEALTH EFFECT,
Online Access:	http://documents.worldbank.org/curated/en/2014/03/19304457/dynamic-effects-microcredit-bangladesh https://hdl.handle.net/10986/18126
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