Estimating the Long-Run Impact of Microcredit Programs on Household Income and Net Worth

17 Pages Posted: 20 Apr 2016

See all articles by Tiemen Woutersen

Tiemen Woutersen

University of Arizona

Shahidur R. Khandker

World Bank - Development Research Group (DECRG)

Date Written: September 1, 2014

Abstract

This paper investigates whether the utilization of microcredit programs has a significant impact on the income and net worth of the participants. Several micro finance institutes are optimistic on the beneficial effects of microcredit programs. Others describe microcredit with interest rates in excess of 20 percent as a poverty trap. This paper uses more than 20 years of panel data on households in Bangladesh to estimate bounds on the causal effects of microcredit programs. The analysis rejects the hypothesis that these microcredit programs are a poverty trap. Moreover, the paper finds moderately positive effects of such programs.

Keywords: Social Development & Poverty, Inequality, Social Protections & Assistance

Suggested Citation

Woutersen, Tiemen and Khandker, Shahidur R., Estimating the Long-Run Impact of Microcredit Programs on Household Income and Net Worth (September 1, 2014). World Bank Policy Research Working Paper No. 7040, Available at SSRN: https://ssrn.com/abstract=2500582

Tiemen Woutersen (Contact Author)

University of Arizona ( email )

Department of Economics
Tucson, AZ 85721
United States

Shahidur R. Khandker

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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