Micro-Credit and Poverty Reduction: A Case of Bangladesh

Abstract

Bangladesh is a pioneer and home of conceptualizing micro-credit program. It has undertaken a number of such programs to reduce poverty and bring about socio-economic changes in the rural community. The main purpose of this paper is to give an overview about access to micro-credit for rural poor and its impact on their poverty situation and relevant factors related to income of the micro-credit recipients. Data was collected in two phases from the same respondents (April 2009 and April 2010) using a face-to-face interview schedule from a sample of 360 micro-credit recipients. Additionally, another set of 60 non-credit beneficiary respondents was also taken as a control group to compare the consequences of the program. Major findings reveal that positive impact was found on income, assets endowment, standard of living and poverty reduction. Utilization of credit appears to be major factor for credit recipients raising income compared to their control group. This shows that micro-credit tends to be an important factor to have an impact on household income which minimizes the poverty situation to a reasonable extent.