Case Study

Microfinance in Bangladesh: Growth, Achievements, and Lessons

Proceedings from "Scaling Up Poverty Reduction: A Global Learning Process and Conference", China
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This paper examines the growth and impact of microfinance in Bangladesh and derives lessons from the Bangladeshi experience.

The paper states that:

  • The growth in access to credit in Bangladesh took place over various phases:
    • The action-research phase of the 1970s;
    • The growth of non-government organizations (NGOs) that delivered credit to the poor in the 1980s;
    • The convergence of various models to form a uniform "Grameen-model" in the 1990s;
  • The following factors contributed to the access in scale in Bangladesh:
    • Visionary leadership within the microfinance institutions (MFIs);
    • A conducive macro-environment and a "hands-off" regulatory policy;
    • Ly donor contribution;
    • High population density and ethnic, social and cultural homogeneity.
  • Microfinance in Bangladesh has reduced the vulnerability of the poor by:
    • Smoothing consumption and limiting the effects of seasonal shortfalls in income;
    • Building assets to absorb shocks;
    • Empowering female borrowers within their households and the community;
    • Bringing in changes in the areas of education, sanitation, etc.

The paper concludes that for other countries to replicate Bangladesh's success in providing access to finance for the poor there is a need for:

  • An "enabling environment" for microfinance;
  • Other interventions to complement microcredit;
  • Adequate donor financial assistance to expand the capital base of emerging MFIs;
  • Replication of the system and formal rules that govern the microfinance industry in Bangladesh.

About this Publication

By Zaman, H.
Published