Income and employment effects of micro-credit programmes: Village-level evidence from Bangladesh

Shahidur Khandker (), Hussain Samad and Zahed Khan

Journal of Development Studies, 1998, vol. 35, issue 2, 96-124

Abstract: Micro-credit programmes, having made their mark in providing credit and other development services to the poor in a non-traditional way, are able to make significant changes in a rural economy. This article attempts to quantify the village-level impacts of the three most important micro-credit programmes of Bangladesh, namely Grameen Bank, Bangladesh Rural Advancement Committee (BRAC), and Bangladesh Rural Development Board's (BRDB) RD-12 project. Descriptive and econometric analyses show that these programmes have positive impacts on income, production, and employment, particularly in the rural non-farm sector. Also, growth in self-employment has been achieved at the expense of wage employment, which implies an increase in rural wages. The article emphasises that an upward shift in the labour demand curve is required for both improved productivity and wage gains on a sustainable basis, which can only be supported through a structural transformation of the rural economy.

Date: 1998
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DOI: 10.1080/00220389808422566

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