Microcredit and Savings of Rural Households in Bangladesh

Muhammad Abdul Latif
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Muhammad Abdul Latif: Senior Research Fellow, Bangladesh Institute of Development Studies (BIDS)

Bangladesh Development Studies, 2001, vol. 27, issue 1, 51-71

Abstract: This paper attempts to analyze the effect of microcredit on household savings. There are over 850 Government and Non-Government Micro Finance Institutions (MFIs) operating at national or various local levels which provide the rural poor who are landless or functionally landless with group-based small credit with the objective of increasing self-employment and income and thereby alleviating poverty. The paper hypothesizes that this microcredit has positive effects on savings of the participated households. The analysis is done with the data derived from a sample survey of 2599 households relating to the financial year 1998/99. The households include both programme participants and nonparticipants.The hypothesis is tested statistically by controlling for such variables as income and land-ownership which also influence saving, and found that microcredit has statistically significant independent effect on household savings. The policy implications that follow from the analysis are to continue with the programmes and formalize them beyond the land-poor.

Keywords: Microcredit; Development studies; Income estimates (search for similar items in EconPapers)
JEL-codes: A12 (search for similar items in EconPapers)
Date: 2001
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Persistent link: https://EconPapers.repec.org/RePEc:ris:badest:0410

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