Seasonal and extreme poverty in Bangladesh: evaluating an ultra-poor microfinance project

Shahidur Khandker (), M. A. Baqui Khalily and Hussain A. Samad

No 5331, Policy Research Working Paper Series from The World Bank

Abstract: Microfinance is often criticized for not adequately addressing seasonality and hard-core poverty. In Bangladesh, a program known as PRIME was introduced in 2006 to address both concerns. Unlike regular microfinance, PRIME introduces a microfinance scheme that offers a flexible repayment schedule and consumption smoothing, as well as production, loans. It targets the ultra-poor, many of whom are also seasonally poor, with a severe inability to smooth consumption during certain months of the year. Besides providing loans, PRIME offers extension and training services. This paper uses a quasi-experimental survey design to evaluate PRIME against regular microfinance programs. The results show that PRIME is more effective than regular microfinance in reaching the ultra-poor, as well as the seasonal poor. PRIME also helps reduce seasonal deprivation and extreme poverty. Although the program has demonstrated its promise, it is too early to conclude whether the accrued benefits are large enough to contain both seasonal and chronic poverty on a sustained basis.

Keywords: Rural Poverty Reduction; Regional Economic Development; Food&Beverage Industry; Debt Markets (search for similar items in EconPapers)
Date: 2010-06-01
New Economics Papers: this item is included in nep-mfd
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Citations: View citations in EconPapers (7)

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