Financing the Poor: Can Microcredit Make a Difference? Empirical Observations from Bangladesh

This study empirically examines the role of MFIs in promoting rural livelihoods in Bangladesh.

The success of microfinance has been contradicted by criticism regarding loan repayment, high interest rates, exploitation of women borrowers, unchanging levels of poverty and failure to cater effectively to target groups. The current study examines these criticisms by conducting field studies in a village in central Bangladesh. Findings indicate that the Grameen microfinance model and bank is:

• Effective for financing the poor and disadvantaged, and criticisms against the model are unwarranted;
• Making a positive difference to poor people and their livelihoods;
• Helping various governmental and non-governmental actors to achieve their developmental objectives.

Finally, while microfinance methodologies are not faultless, they are not a miracle cure for eliminating poverty. Microfinance needs to be combined with other innovative programs that unleash people’s potential to achieve freedom from poverty.