The Effectiveness of Micro-credit Programmes Focusing on Household Income, Expenditure and Savings: Evidence From Bangladesh

Abstract

This paper assesses the effectiveness of microfinance on household income, expenditure and savings. The survey examined those borrowers who had successfully completed at least three cycles of a loan. A household level survey (N=3000) was carried out to collect information about individuals receiving microcredit from one of the largest NGOs, ASA. The authors employed a multiple regression and discovered that the microcredit programme of ASA has a significant positive impact on household income, expenditures and savings. Moreover, the paper reveals that the level of education plays an important and statistically significant role in increasing the household income, expenditure and savings. Hence, the ASA microcredit programme has a positive impact on reducing poverty in Bangladesh and enhancing the competitiveness of deprived rural and urban households in improving their standard of living.

Treatment strategies for bad loans to microfinancial institutions: evidence from Kendari, Indonesia

“…The study found that microcredit programs had a significant positive impact on household income, expenditure and savings. In addition, this study revealed that the level of education plays an important and significant role in increasing household income, expenditure and savings (Choudhury et al, 2017). Another study from Pakistan concluded that microfinance institutions have been superior in poverty alleviation and empowerment than conventional financial system approaches (Khan, Shaorong, & Ullah, 2017).…”

“…The efficacy of microfinancial institution in poverty alleviation han been noticeable in several developing countries, such as Bangladesh, even though the concept is still in debate (Afonso et al, 2011). In the same vein, Choudhury et al (2017) prove that microfinancial program has a positive effect on poverty alleviation and the increase of village household competitiveness in Bangladesh, with the result of increased living standard. Another research (Brief, 2015) in Bosnia and Herzegovina find that the efficacy of microfinance is only noticeable in small groups, while in Portugal (Afonso et al, 2011), the estimate of the failure rate of microfinance program was 20.6 percent in 2006-2009.…”

“…The existence of microfinancial institutions is expected to significantly uphold people welfare. Several research has found relationship between microfinancial institution and reduced poverty (Choudhury et al, 2017;Mazumder & Wencong, 2013). Microfinance can serve as an instrument for empowerment to achieve increased public income and reduced poverty (Saefullah, 2018).…”

Barriers in Financing Microenterprises From the Perspective of Czech and Slovak Microentrepreneurs

“…In addition to the financial support provided by the Slovak government and other institutions such as the Microloan Program run by the Slovakian Business Agency, new microcredit or microfinance institutions, microenterprise development programs, non-profit financial intermediary organizations, microlending projects and programs, saving and credit cooperatives, intermediary programs, microenterprise zones, and microenterprise assistance programs can be set up or encouraged by government to ease access conditions and increase credit volumes. For instance, microfinance institutions do not ask for collateral that needs to be shown by borrowers to get credit (Ariful, Das, & Rahman, 2017). These institutions encourage microenterprises that urgently need credits and provide a wide range of credit options for microenterprises to ease credit access conditions (Atmadja et al, 2016).…”

Microcredits for Sustainable Development of Small Ukrainian Enterprises: Efficiency, Accessibility, and Government Contribution

“…In [35], it is stated that firms that use loans in the initial year of their activity are significantly more likely to survive and achieve a higher level of income three years after the establishment of the firm. Therefore, in [36], we considered the long-term consequences of lending to enterprises, namely, we studied the presence of a certain lag between the moment of taking a loan and the moment of receiving returns from it. It is worth mentioning the results of a study conducted in [37], which found a significant positive impact of microfinances on household income, spending, and savings.…”