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From microcredit to microfinance: evolution of savings products by MFIs in Bangladesh

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  • Asif Dowla

    (St. Mary's College of Maryland, St. Mary's City, MD, USA)

  • Dewan Alamgir

    (USAID, Dhaka, Bangladesh)

Abstract

This paper chronicles how the microfinance industry in Bangladesh has evolved from its initial focus on credit, disbursing standardized loan products and collecting obligatory savings to the development of flexible savings products. We describe the process through which the industry gradually moved away from compulsory savings and introduce flexible savings. We provide detailed descriptions of various savings related products used by MFIs in Bangladesh. We point out the numerous problems that can arise when MFIs collects savings especially from non-members without a proper legal framework. We conclude the paper by suggesting prudent regulation of MFIs to ensure the security of the meager savings of the poor. Copyright © 2003 John Wiley & Sons, Ltd.

Suggested Citation

  • Asif Dowla & Dewan Alamgir, 2003. "From microcredit to microfinance: evolution of savings products by MFIs in Bangladesh," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(8), pages 969-988.
    • Handle: RePEc:wly:jintdv:v:15:y:2003:i:8:p:969-988
    DOI: 10.1002/jid.1032
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    References listed on IDEAS

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    1. Isinta & H. M & Aduda & J & Magutu & P, 2019. "Intervening Effect of Savings Mobilization on the Relationship between Bancassurance and Financial Performance of Commercial Banks in Kenya," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 8(2), pages 1-4.
    2. Sugato Chakravarty & Abu Zafar M. Shahriar, 2015. "Selection of Borrowing Partners in Joint Liability–Based Microcredit: Evidence from Framed Field Experiments in Bangladesh," Entrepreneurship Theory and Practice, , vol. 39(1), pages 129-144, January.
    3. Mikhail Drugov & Rocco Macchiavello, 2014. "Financing Experimentation," American Economic Journal: Microeconomics, American Economic Association, vol. 6(1), pages 315-349, February.
    4. Bruno, Olivier & Khachatryan, Knar, 2020. "Compulsory versus voluntary savings as an incentive mechanism in microfinance programs," Journal of Behavioral and Experimental Finance, Elsevier, vol. 26(C).
    5. Carolina Laureti & Ariane Szafarz, 2012. "The Time-Inconsistency Factor: How Banks Adapt to their Mix of Savers," Working Papers CEB 12-035, ULB -- Universite Libre de Bruxelles.
    6. Drugov, Mikhail & Macchiavello, Rocco, 2008. "Learning and Microlending," CEPR Discussion Papers 7011, C.E.P.R. Discussion Papers.
    7. Mushtaque Chowdhury & Paul Mosley & Anton Simanowitz, 2004. "Introduction," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(3), pages 291-300.
    8. Carolina Laureti & Ariane Szafarz, 2014. "Having it Both Ways: A Theory of the Banking Firm with Time-Consistent and Time-Inconsistent Depositors," Working Papers CEB 14-011, ULB -- Universite Libre de Bruxelles.
    9. Tunvir Ahamed Shohel & Sara Niner & Samanthi J. Gunawardana, 2023. "‘Even Though I Get a Loan, My Husband Controls It’: Rhetoric Versus Reality of Empowering Bangladeshi Women Through Microfinance Programs," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 35(4), pages 794-819, August.
    10. Carolina Laureti & Ariane Szafarz, 2014. "The Liquidity Premium: Commercial Banks versus Microfinance Institutions," Working Papers CEB 14-029, ULB -- Universite Libre de Bruxelles.
    11. Carolina Laureti & Ariane Szafarz, 2016. "The price of deposit liquidity: banks versus microfinance institutions," Applied Economics Letters, Taylor & Francis Journals, vol. 23(17), pages 1244-1249, November.
    12. Mikhail Drugov & Rocco Macchiavello, 2014. "Financing Experimentation," American Economic Journal: Microeconomics, American Economic Association, vol. 6(1), pages 315-349, February.
    13. Shamima Nasrin & Angathevar Baskaran & Rajah Rasiah, 2017. "Microfinance and savings among the poor: evidence from Bangladesh microfinance sector," Quality & Quantity: International Journal of Methodology, Springer, vol. 51(4), pages 1435-1448, July.

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