Who Benefits Most from Microfinance in Bangladesh?

This paper examines the heterogeneous impacts of microfinance intervention in rural Bangladesh using a long panel survey data expanding from 1991/92 to 2010/11. Heterogeneity in programme effects may arise due to household (such as landholding, head’s education, employment or skills in oral math) and community (electrification and accessibility) characteristics. Benefits do vary by such characteristics. For example, large and medium holders benefit more than marginal or small holders from microfinance in non-land asset, net worth and labour supply. Beneficiary households whose heads completed primary education experience higher gains in non-land asset and net worth than those whose heads did not complete primary education. Also, having adults with competency in oral math (supposedly helpful in augmenting in entrepreneurial skills) helps the households benefit more. Beneficiaries in villages with electricity and better road access benefit more than those in villages lacking electricity or access. Quantile regression estimates show that, with the exception of the effects of male borrowing, lower income households benefit more than higher income ones. Finally, this paper shows that households with older heads or more adult males are likely to drop out from microfinance, so are those with adults with less competency in oral math. However, programme dropouts are not large enough to affect the overall benefits of microfinance.