Microfinance and Poverty: Evidence Using Panel Data from Bangladesh

This paper seeks to answer the question of whether microfinance has a significant impact on poverty levels, both at the individual and village levels. It estimates the impact of microfinance on consumption poverty using panel data from household surveys for 1991/2 and 1998/9. The author begins by giving a brief background on microfinance in Bangladesh:

• Microfinance has largely been successful in Bangladesh both in terms of outreach and low default rates;
• Government and donor support has provided capital for on-lending;
• Past impact assessments show that microfinance is generally helpful to the poor, but not equally across participants.

He then provides:

• The methodology behind data comparison and the importance of choosing the correct comparison data;
• A detailed description of the comparison data to give the reader an understanding of the data sample and the changes that occurred over the seven-year time period;
• The results of the study to suggest that microfinance does impact poverty both for individual participants (especially women) and the village level, strengthening the local economy.