Resource information
Microfinance supports mainly informal
activities that often have a low return and low market
demand. It may therefore be hypothesized that the aggregate
poverty impact of microfinance is modest or even
nonexistent. If true, the poverty impact of microfinance
observed at the participant level represents either income
redistribution or short run income generation from the
microfinance intervention. This article examines the effects
of microfinance on poverty reduction at both the participant
and the aggregate levels using panel data from Bangladesh.
The results suggest that access to microfinance contributes
to poverty reduction, especially for female participants,
and to overall poverty reduction at the village level.
Microfinance thus helps not only poor participants but also
the local economy.
