Does Microcredit Reach the Poor and Vulnerable? Evidence from Nothern Bangladesh

S. Amin, A.S. Rai and Giorgio Topa

Working Papers from Chicago - Graduate School of Business

Abstract: Subsidized loans have a history of being diverted to the rich. Yet recently microcredit programs, such as the Grameen Bank in Bangladesh, have become popular among donors and governments as a way to channel funds to the poor. This paper uses a unique panel dataset from two Bangladeshi villages to test if the modern microcredit movement is different from its predecessors. Poverty is measured by levels of consumption. Vulnerability is measured as fluctuations in consumption associated with inefficient risk sharing. We find that subsidized credit is largely successful at reaching the poor and vulnerable. The probability that a microcredit member is below the poverty line is substantially higher than that of a randomly picked household in both villages. In the village where female headed households were found to be vulnerable, nearly half of the female headed households belonged to microcredit programs yet only a quarter of male headed households were microcredit members. While restricting loans to the landless is not effective in reaching the poor and vulnerable, targeting female headed households is.

Keywords: MICROCREDIT; POVERTY (search for similar items in EconPapers)
JEL-codes: I38 O16 Q12 (search for similar items in EconPapers)
Pages: 55 pages
Date: 2000
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Does microcredit reach the poor and vulnerable? Evidence from northern Bangladesh (2003)
Working Paper: Does Microcredit Reach the Poor and Vulnerable? Evidence from Northern Bangladesh (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:fth:chicbu:28

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