The Limitations of Microcredit for Promoting Microenterprises in Bangladesh
Economic Annals, Vol. 57(192), pp. 41-53, 2012
14 Pages Posted: 29 Mar 2017
Date Written: 2012
Microcredit is regarded as a tool for poverty alleviation. A stereotyped delivery system is designed and used for promoting and serving survival and subsistence level economic activities, particularly for poor female clients. In Bangladesh its success has raised social expectations as to its potential as also a promoter of microenterprises, which are growth-yielding small businesses beyond subsistence level economic activity. The field survey shows that about 11.7% of the microcredit borrowers are this kind of potential or growing microentrepreneur. It also shows that microcredit’s standardised delivery system, particularly in respect of gender preference, loan size, loan disbursement, and repayment schedules, is a strong limiting factor in effectively serving the microenterprises, which require a more flexible credit package. Therefore a methodological modification is necessary to accommodate flexibility in the microcredit delivery system.
Keywords: Grameen Bank, microcredit, microenterprise, subsistence, poverty alleviation, stereotype
JEL Classification: O12, O29
Suggested Citation: Suggested Citation