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Microfinance and Poverty: Evidence Using Panel Data from Bangladesh

Year: 2005

Type: article

Abstract: Microfinance supports mainly informal activities that often have a low return and low market demand. It may therefore be hypothesized that the aggregate poverty impact of microfinance is modest or even nonexistent. If true, the poverty impact of microfinance observed at the participant level represents either income redistribution or short-run income generation from the microfinance intervention. This article examines the effects of microfinance on poverty reduction at both the participant and the aggregate levels using panel data from Bangladesh. The results suggest that access to microfinance contributes to poverty reduction, especially for female participants, and to overall poverty reduction at the village level. Microfinance thus helps not only poor participants but also the local economy.

Source: The World Bank Economic Review

DOI: 10.1093/wber/lhi008

Author: S. R. Khandker

Institutions: World Bank, World Bank Group

Language: English

Topic: Microfinance and Financial Inclusion

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: No poverty, Decent work and economic growth, Reduced inequalities, Gender equality

Open Access status: bronze

OpenAlex ID: W3121900324