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Microfinance and poverty - evidence using panel data from Bangladesh, Volume 1
Author:Khandker, Shahidur R.; Country:Bangladesh;
Date Stored:2003/03/28Document Date:2003/01/31
Document Type:Policy Research Working PaperSubTopics:Payment Systems & Infrastructure; Environmental Economics & Policies; Banks & Banking Reform; Poverty Monitoring & Analysis; Financial Intermediation; Poverty Assessment
Language:EnglishRegion:South Asia
Report Number:WPS2945Sub Sectors:Micro- and SME finance
Collection Title:Policy, Research working paper ; no. WPS 2945Volume No:1

Summary: 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. The author 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 village level. But the effect is more pronounced in reducing extreme rather than moderate poverty.

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