Does the Participation in the Microcredit Programs Increase Consumption of Participating Households? The Case of the Grameen Bank in Bangladesh

This paper assesses the impact of participation in the Grameen Bank's microcredit program on the consumption levels of participating households. The paper uses weekly total food consumption expenditures as a proxy for the poverty status of a household. The study examines one group of households, which have already received more than one loan from the Grameen Bank's microcredit program (program households), and another group of households, who had just joined the program or received their first loan (comparison households). Study results indicate that:

• Program  households consume 19% more than comparison households;
• Microcredit program participation significantly increases consumption levels of participating households;
• Additional year of membership in the microcredit program increases consumption levels by one and half percent;
• Increasing trend in consumption levels of participating households continues up to five years of membership;
• Growth in consumption starts showing a declining trend after five years of membership.

 On the basis of estimated results, the study concludes that participation in the Grameen Bank's microcredit program increases consumption levels of participating households.