Are Microcredit Participants in Bangladesh Trapped in Poverty and Debt?

This paper studies the role of microfinance in poverty reduction and indebtedness using the most recent data from Bangladesh. It uses a 20-year panel survey involving 1509 households for the study. The study is based on an econometric model that controls for why some households participate in microcredit programs and others do not. In addition, the method adopted is controlled for time-varying, unobserved heterogeneity that affected everyone over time. The study covers the following sections in detail:

• Need for the study with a focus on the opinions of critics and relevant literature available;
• Details of the long panel survey and data characteristics;
• Correlation of changing participation status with poverty and other welfare measures such as growth in income, expenditure, and non-food consumption, reduction in poverty and extreme poverty, children’s education and reduction in gender disparity, and intergenerational mobility;
• Asset ownership and indebtedness of MFI participants;
• Fixed effects regression model estimates and a discussion of the technique;
• Conclusions from the econometric analysis.