Does access to finance matter in microenterprise growth ? evidence from Bangladesh, Vol. 1 of 1

About

Countries

Data & Research

Learning

News

Projects & Operations

Publications

Topics

Home > Data & Research > Document Search > Report Details

Does access to finance matter in microenterprise growth ? evidence from Bangladesh

Author:	Khandker, Shahidur R.; Samad, Hussain A.; Ali, Rubaba;	Collection Title:	Policy Research working paper ; no. WPS 6333
Country:	Bangladesh;	Date Stored:	2013/01/23
Document Date:	2013/01/01	Document Type:	Policy Research Working Paper
Language:	English	Rel. Proj ID:	BD-Long-Term Dyamics Of Microcredit Pograms In Bangladesh -- -- P121355;
Region:	South Asia	Report Number:	WPS6333
Sub Sectors:	Micro- and SME finance	SubTopics:	Access to Finance; Economic Theory & Research; Debt Markets; Banks & Banking Reform; Investment and Investment Climate
Volume No:	1 of 1

Summary: In less-developed economies such as Bangladesh, the farm sector is the major source of employment and income, while the rural nonfarm sector provides as an additional source of income. But the rural nonfarm sector increasingly plays an important role in fostering the development of the rural economy. A significant share of this sector is made up of microenterprise activities, which requires investment and access to adequate funds. This paper investigates the role access to finance plays in promoting the efficiency and growth of microenterprise activities. The findings suggest that households engaged in microenterprise activities, in addition to farm and other nonfarm activities, are much better off (in terms of income, expenditure and poverty) than those not engaged in such activities. Fewer than 10 percent of the enterprises have access to institutional finance (formal banks or microcredit), although the rate of return on microenterprise investments is more than sufficient (36 percent per year) to repay institutional loans. The research suggests that credit constraints may reduce the enterprises' profit margin by as much as 13.6 percent per year. As the returns to microenterprise investment are found to be high, microfinance institutions can play a larger role in supporting microenterprise growth in Bangladesh.


Official Documents Official, scanned versions of documents (may include signatures, etc.)
File Type		Description	File Size (mb)

	PDF 51 pages	Official version*	3.57 (approx.)
	Text	Text version**

	See documents related to this project

* The official version is derived from scanning the final, paper copy of the document and is the official,
archived version including all signatures, charts, etc.

** The text version is the OCR text of the final scanned version and is not an accurate representation of the final text.
It is provided solely to benefit users with slow connectivity.

Permanent URL for this page: http://go.worldbank.org/Y1YDGUPF00