IDEAS home Printed from https://ideas.repec.org/a/taf/irapec/v31y2017i4p495-507.html
   My bibliography  Save this article

Does microcredit increase borrowers’ savings? A fuzzy regression discontinuity design approach

Author

Listed:
  • Khondker Aktaruzzaman
  • Omar Farooq

Abstract

Microcredit has expanded rapidly in recent years but its effect at the household level is still controversial. This paper uses a unique data-set collected from 69 villages in Bangladesh to estimate the effect of participation in microcredit programs on household savings. A regression discontinuity design (RDD) is used to identify the credit effect. To justify the validity of RDD, we test the discontinuities in the conditional density of the forcing variable (in our case, household land), as suggested by McCrary. We do not find any substantial evidence of manipulation of forcing variable at the threshold to invalidate the RDD. Our results show that access to credit increases savings of the borrowers.

Suggested Citation

  • Khondker Aktaruzzaman & Omar Farooq, 2017. "Does microcredit increase borrowers’ savings? A fuzzy regression discontinuity design approach," International Review of Applied Economics, Taylor & Francis Journals, vol. 31(4), pages 495-507, July.
  • Handle: RePEc:taf:irapec:v:31:y:2017:i:4:p:495-507
    DOI: 10.1080/02692171.2016.1263607
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/02692171.2016.1263607
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/02692171.2016.1263607?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:pri:rpdevs:morduch_microfinance_poor is not listed on IDEAS
    2. Jonathan Morduch, 1998. "Does Microfinance Really Help the Poor? New Evidence from Flagship Programs in Bangladesh," Working Papers 198, Princeton University, Woodrow Wilson School of Public and International Affairs, Research Program in Development Studies..
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Abu S. Shonchoy, 2015. "Seasonal Migration and Microcredit During Agricultural Lean Seasons: Evidence from Northwest Bangladesh," The Developing Economies, Institute of Developing Economies, vol. 53(1), pages 1-26, March.
    2. M. Jahangir Alam Chowdhury & Dipak Ghosh & Robert E. Wright, 2005. "The impact of micro-credit on poverty: evidence from Bangladesh," Progress in Development Studies, , vol. 5(4), pages 298-309, October.
    3. Islam, Asadul & Nguyen, Chau & Smyth, Russell, 2015. "Does microfinance change informal lending in village economies? Evidence from Bangladesh," Journal of Banking & Finance, Elsevier, vol. 50(C), pages 141-156.
    4. Amin, Sajeda & Rai, Ashok S. & Topa, Giorgio, 2003. "Does microcredit reach the poor and vulnerable? Evidence from northern Bangladesh," Journal of Development Economics, Elsevier, vol. 70(1), pages 59-82, February.
    5. Schreiner, Mark & Woller, Gary, 2003. "Microenterprise Development Programs in the United States and in the Developing World," World Development, Elsevier, vol. 31(9), pages 1567-1580, September.
    6. van den Bold, Mara & Quisumbing, Agnes R. & Gillespie, Stuart, 2013. "Women’s empowerment and nutrition: An evidence review:," IFPRI discussion papers 1294, International Food Policy Research Institute (IFPRI).
    7. Berg Claudia & Emran M. Shahe, 2020. "Microfinance and Vulnerability to Seasonal Famine in a Rural Economy: Evidence from Monga in Bangladesh," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 20(3), pages 1-36, July.
    8. Mukherjee, Arghya Kusum & Kundu, Amit, 2012. "Swarnajayanti Gram Swarojgar Yojona as a Safety Net: Evidence from Murshidabad District of West Bengal," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 35(1), pages 79-103, March.
    9. Pushkar Maitra & Sandip Mitra & Dilip Mookherjee & Alberto Motta & Sujata Visaria, 2014. "Helping Microfinance Fulfill its Promise: Raising Borrower Incomes through Agent-Intermediated Lending," HKUST IEMS Thought Leadership Brief Series 2015-03, HKUST Institute for Emerging Market Studies, revised Oct 2014.
    10. Paul, Bénédique & Garrabé, Michel, 2011. "Le capital institutionnel dans l'analyse du développement : Prolongement théorique et premier test empirique [Institutional Capital in Economic Development Analysis: Theoretical Continuation and Fi," MPRA Paper 39016, University Library of Munich, Germany.
    11. James Wang, 2020. "Screening soft information: evidence from loan officers," RAND Journal of Economics, RAND Corporation, vol. 51(4), pages 1287-1322, December.
    12. David Roodman & Jonathan Morduch, 2014. "The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence," Journal of Development Studies, Taylor & Francis Journals, vol. 50(4), pages 583-604, April.
    13. Chin, Yoo-Mi, 2012. "Credit Program Participation and Decline in Violence: Does Self-Selection Matter?," World Development, Elsevier, vol. 40(8), pages 1690-1699.
    14. Teppo Eskelinen & Johanna Perkiö, 2018. "Micro‐investment perspective and the potential of the universal basic income," Development Policy Review, Overseas Development Institute, vol. 36(S2), pages 696-709, September.
    15. Baland, Jean-Marie & Somanathan, Rohini & Wahhaj, Zaki, 2013. "Repayment incentives and the distribution of gains from group lending," Journal of Development Economics, Elsevier, vol. 105(C), pages 131-139.
    16. Joana Silva Afonso, 2020. "Impact evaluation, social performance assessment and standardisation: reflections from microfinance evaluations in Pakistan and Zimbabwe," Working Papers in Economics & Finance 2020-14, University of Portsmouth, Portsmouth Business School, Economics and Finance Subject Group.
    17. Mahoukede, Kinkingninhoun-Medagbe & Aliou, Diagne & Gauthier, Biaou, 2015. "Impact of Use of Credit in rice farming on rice Productivity and Income in Benin," 2015 Conference, August 9-14, 2015, Milan, Italy 211635, International Association of Agricultural Economists.
    18. Das, Narayan C & Raza, Wameq A, 2010. "Does a Grant-based Approach Work for Addressing Extreme Poverty? A RCT Approach," MPRA Paper 51005, University Library of Munich, Germany.
    19. Gunther Bensch & Jochen Kluve & Jörg Peters, 2011. "Impacts of rural electrification in Rwanda," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 3(4), pages 567-588, December.
    20. Mark Schreiner & Jacob Yaron, 2001. "Development Finance Institutions : Measuring Their Subsidy," World Bank Publications - Books, The World Bank Group, number 13983.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:irapec:v:31:y:2017:i:4:p:495-507. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CIRA20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.