How do microfinance programs contribute to poverty reduction?

Abstract

The purpose of this thesis is to address if microfinance institutions (MFIs) facilitate poverty reduction in Bangladesh. The research begins with an overview of the historical, institutional, and political underpinnings of poverty in Bangladesh and then surveys quantitative findings to determine the extent to which the rural poor's income can be augmented. Resources furnishing this analysis include panel data drawn from MFI borrowers in randomly selected villages that have branches serviced by Grameen Bank, Association for Social Advancement (ASA), and Bangladesh Rural Advancement Committee (BRAC). In addition, by addressing development indicators, microcredit's non-economic outcomes—or spillover effects—are also measured, including literacy and infant mortality. In order to address MFIs' more difficult-to-measure spillover effects, this thesis also treats the notions of civil society and women's empowerment as relevant areas that pertain to poverty mitigation.