Role of Targeted Credit in Rural Non-farm Growth

Shahidur Khandker ()

Bangladesh Development Studies, 1996, vol. 24, issue 3-4, 181-193

Abstract: In a labour surplus country like Bangladesh, rural non-farm (RNF) sector is important not only for poverty alleviation but also for promoting overall economic growth. Lack of credit has proved to be a binding constraint to the growth of RNF activities. Microcredit from Grameen Bank, BRAC, and RD-12 programme of the BRDB has played a significant role in relaxing this constraint and promoting RNF activities in Bangladesh. Data from household level survey show that both household characteristics and community factors are important determinants of RNF participaion. Better infrastructure promotes RNF participation while better income earning opportunities in agriculture reduce it. Trade and manufacturing are the dominant forms of RNF activities in Bangladesh. Household attributes, village characteristics, and prices and wages have been found to explain a significant part of variations of the choice structure of the RNF activities. Analysis of borrower-level data clearly indicates that because of skill training and other organizational help, BRAC borrowers have managed to sustain increased productivity with improved access to credit. Therefore, the supply of affordable credit for the expansion of RNF production must be supported by appropriate skill development, market promotion, and other organizational supports.

Keywords: Livestock; Villages; Employment; Productivity; Return on capital; Credit supply; Bank credit; Bank capital; Trade; Development studies (search for similar items in EconPapers)
JEL-codes: A12 (search for similar items in EconPapers)
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:ris:badest:0365

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