Micro-Finance and Poverty: Evidence Using Panel Data from Bangladesh

32 Pages Posted: 20 Apr 2016

See all articles by Shahidur R. Khandker

Shahidur R. Khandker

World Bank - Development Research Group (DECRG)

Date Written: January 2003


Micro-finance supports mainly informal activities that often have low market demand. It may be thus hypothesized that the aggregate poverty impact of micro-finance in an economy with low economic growth is modest or nonexistent. The observed borrower-level poverty impact is then a result of income redistribution or short-run income generation.

Khandker addresses these questions using household level panel data from Bangladesh. The findings confirm that micro-finance benefits the poorest and has sustained impact in reducing poverty among program participants. It also has positive spillover impact, reducing poverty at the villate level. But the effect is more pronounced in reducing extreme rather than moderate poverty.

This paper - a product of Rural Development, Development Research Group - is part of a larger effort in the group to analyze the impact of targeted programs on the poor.

Suggested Citation

Khandker, Shahidur R., Micro-Finance and Poverty: Evidence Using Panel Data from Bangladesh (January 2003). Available at SSRN: https://ssrn.com/abstract=636307

Shahidur R. Khandker (Contact Author)

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

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

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