The Impact of SME Financing on Beneficiary Households: An Empirical Study from Kushtia District, Bangladesh

Rumana Pervin and Shahed Ahmed
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Rumana Pervin: Department of Economics, Adarsho Government Mohila College, Chuadanga, Bangladesh
Shahed Ahmed: Department of Economics, Islamic University, Kushtia-7003, Bangladesh

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 3, 3787-3798

Abstract: This study investigates the socioeconomic impact of Small and Medium Enterprise (SME) financing on borrower households in the Kushtia district of Bangladesh. Given SMEs’ critical contribution to national GDP and employment, the research examines how formal credit—particularly from commercial banks—affects borrowers’ income, asset accumulation, occupation, savings, employment, and overall financial well-being. Using primary data from 120 SME borrowers (67 new and 53 repeat), the study adopts a structured questionnaire and employs descriptive statistics, t-tests, and multiple regression analysis for data interpretation. Results show that SME financing positively influences household income, with repeat borrowers reporting higher gains in income, savings, and asset ownership. Though differences in asset categories (household, productive, and livestock) exist between groups, they are not statistically significant. Employment generation was modest, with over 43% reporting increased employment, and occupational shifts were minimal. The study finds that SME financing contributes to enhanced savings capacity, especially among repeat borrowers, suggesting greater financial security and reinvestment potential. Labor force participation remained relatively stable, with no significant changes in gender or household employment dynamics. Borrower satisfaction was high across both groups, with over two-thirds reporting positive experiences. Regression analysis identifies expenditure and non-land assets as the most significant predictors of income, especially for repeat borrowers, while factors such as interest rate and working hours showed minimal influence. The findings highlight the transformative role of SME financing in rural economic development and provide evidence-based recommendations for strengthening support mechanisms for small entrepreneurs in Bangladesh.

Date: 2025
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