How Effective is a Big Push to the Small? Evidence from a Quasi-random Experiment
This paper investigates whether a one-off large grant to the extreme poor enables them to participate in a regular microfinance program that typically excludes them.
The paper uses data from a quasi-random control experiment on Bangladesh Rural Advancement Committee's Targeting the Ultra Poor program in Bangladesh. The program provided extremely poor people with income-generating assets and support for a period of 18 months. Support included enterprise management assistance, subsistence allowance, and support for building social networks.
The paper investigates the role of demographic and household characteristics, economic endowments, social capital and poor people's awareness of social malpractices and legal injustices in ensuring that the grant helps the poor access regular microfinance. The results for 2002 baseline and 2005 repeat survey data show that:
- Such a big push has significant impact on graduation to regular microfinance programs;
- Social capital has significant effect on borrowing decisions;
- Awareness of social and legal issues has significant effect on NGO membership and borrowing decisions.
