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Microfinance and poverty : evidence using panel data from Bangladesh (English)

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.


  • Author

    Khandker, Shahidur R

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    Journal Article

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    South Asia,

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  • Doc Name

    Microfinance and poverty : evidence using panel data from Bangladesh

  • Keywords

    microfinance;microfinance program;rate of return to capital;demand for credit;impact on poverty reduction;marginal product of capital;per capita expenditure;average incidence of poverty;per capita food expenditure;per capita consumption;credit demand;panel data;panel data analysis;village level infrastructure;level of consumption;consumption equation;instrumental variable;program participation;change in poverty;impact of credit;household survey;household and individual;rate of depreciation;estimation of equation;local market condition;change in consumption;loan default rate;rate of consumption;poverty reduction activity;consumption over time;positive spillover effect;amount of credit;access to microfinance;reduction in poverty;differences in results;extent of poverty;poverty reduction impact;program placement bias;change in behavior;reproductive health issue;difference in methodology;role of gender;youth development;village average;household total expenditure;household consumption behavior;household survey data;marginal return;program effect;nonfood expenditure;



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Khandker, Shahidur R

Microfinance and poverty : evidence using panel data from Bangladesh (English). Washington, D.C. : World Bank Group.