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The scaling-up of microfinance in Bangladesh : determinants, impact, and lessons

Author

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  • Zaman, Hassan

Abstract

The microfinance industry in Bangladesh currently provides access to credit to around 13 million poor households. The author describes the factors that led to the scaling-up of micro-credit in Bangladesh, the impact this has hadon the poor, future challenges in Bangladesh, and possible lessons for other countries. The consensus in the literature is that micro-credit plays a significant role in reducing household vulnerability to a number of risks and that it contributes to improving social indicators. The author argues that strategic donor investments in a handful of well-managed institutions that offer a simple, easily replicable financial product could lead to large gains in access to finance for the poor. However, this approach could sacrifice other objectives of financial sector development, such as product and institutional diversity, which could be promoted after the initial expansion has taken place. Governments can also have a crucial role in promoting access to microfinance by ensuring macroeconomic stability, enforcing a simple regulatory structure, and developing communications networks that reduce transaction costs. Another lesson is that while visionary leadership cannot simply be franchised, the internal management systems that led to the scaling-up can be replicated in other settings.

Suggested Citation

  • Zaman, Hassan, 2004. "The scaling-up of microfinance in Bangladesh : determinants, impact, and lessons," Policy Research Working Paper Series 3398, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3398
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    Citations

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    Cited by:

    1. Adam B. Elhiraika & Khalid Abu Ismail, 2004. "Financial Sector Policy and Poverty Reduction in Sudan," Working Papers 0411, Economic Research Forum, revised 05 Jun 2004.
    2. Berg Claudia & Emran Shahe & Shilpi Forhad, 2020. "Microfinance and Moneylenders: Long-run Effects of MFIs on Informal Credit Market in Bangladesh," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(3), pages 1-35, July.
    3. Malika Anand & Richard Rosenberg, 2008. "Are We Overestimating Demand for Microloans?," World Bank Publications - Reports 9521, The World Bank Group.
    4. Gauri, Varun & Galef, Julia, 2005. "NGOs in Bangladesh: Activities, resources, and governance," World Development, Elsevier, vol. 33(12), pages 2045-2065, December.
    5. Abu Zafar Shahriar, 2012. "Impact of Microfinance on Seasonal Hardship in Northern Bangladesh: A Propensity Score Matching Approach," Journal of South Asian Development, , vol. 7(1), pages 43-64, April.
    6. Khandker, Shahidur R. & Khalily, M. A. Baqui & Samad, Hussain A., 2010. "Seasonal and extreme poverty in Bangladesh : evaluating an ultra-poor microfinance project," Policy Research Working Paper Series 5331, The World Bank.
    7. Koloma, Yaya, 2019. "Microfinance et réduction de la pauvreté selon le genre au Mali : un réexamen des données de 2007-2008 [Microfinance and Poverty Reduction by Gender in Mali: A Review of 2007-2008 data]," MPRA Paper 94745, University Library of Munich, Germany.
    8. repec:etr:series:v:3:y:2012:i:11:p:330-340 is not listed on IDEAS
    9. Garikipati, Supriya, 2008. "The Impact of Lending to Women on Household Vulnerability and Women's Empowerment: Evidence from India," World Development, Elsevier, vol. 36(12), pages 2620-2642, December.
    10. Beck, Thorsten & de la Torre, Augusto, 2006. "The basic analytics of access to financial services," Policy Research Working Paper Series 4026, The World Bank.
    11. M.A. Majid Pramanik & Lu Qian, 2012. "Does RDA-credit differ from others’ microcredit? A case study of Bangladesh," E3 Journal of Business Management and Economics., E3 Journals, vol. 3(10), pages 330-340.

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