Can credit promote rural transformation? Evidence from district-level data in Bangladesh

Subrata Saha, Mohammad Jahangir Alam (), Al Amin Al Abbasi, Ismat Ara Begum, Maria Fay Rola-Rubzen, Panam Parikh and Andrew M. McKenzie
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Subrata Saha: Bangladesh Agricultural University
Mohammad Jahangir Alam: Bangladesh Agricultural University
Al Amin Al Abbasi: Bangladesh Agricultural University
Ismat Ara Begum: Bangladesh Agricultural University
Maria Fay Rola-Rubzen: University of Western Australia
Panam Parikh: Nutrition for Impact
Andrew M. McKenzie: University of Arkansas

Palgrave Communications, 2025, vol. 12, issue 1, 1-10

Abstract: Abstract In this paper, we assess the impact of credit on rural transformation in Bangladesh. District-level rural data from three waves of the Bangladesh Household Income and Expenditure Survey (HIES) were analyzed using ordinary least squares and fixed-effects panel regression analysis. The findings indicate that increasing household credit significantly stimulated the production of high-value agricultural commodities and expanded opportunities for non-farm employment in rural areas. Robustness analysis using access to credit instead of average household credit confirmed the positive relationship between credit and rural transformation at the district level. Access to education and electricity was also found to be positively related to rural transformation; on the other hand, the decline in land per capita was directly related to rural non-agricultural employment opportunities. Our findings highlight the necessity of improving credit accessibility, enhancing capacity-building skills and knowledge of both institutions and individuals, and implementing financial literacy programs for an inclusive, sustainable rural transformation in Bangladesh.

Date: 2025
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DOI: 10.1057/s41599-025-04588-3

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