Title: Microcredit in rural Bangladesh: evaluation of consumption change and poverty gap

Authors: Rashadur Rahman; Nishad Nasrin; Sal Sabil Islam

Addresses: Department of Economics, North Western University, 236, M.A Bari Road, Sonadanga, Khulna-9000, Bangladesh ' Department of Economics, Khulna University, 9208, Bangladesh ' Mozida Monjil, 12 Moulovipara Road, Khulna, Bangladesh

Abstract: Microcredit is excessively used in the rural areas of Bangladesh due to reduce poverty and upgrade the living standard of the rural dwellers. This paper aims to imitate the sole story of consumption pattern and poverty situation of the rural poor of Bangladesh who tries to change their fate through microcredit. Multiple regression models are used as a tool of making out poverty gap result as well as the change in consumption level of the borrower due to microcredit. In this paper, microcredit positively and significantly influences consumption change but it increases poverty gap of the rural borrower. Though it regards as a poverty reduction tool but the result denotes that probably it is mostly used in the consumption purpose rather than any planned income generating actions. The consumption portion carries a large amount of repayment of loan which mainly affects their standard of living and keeps them below the poverty line.

Keywords: microcredit; consumption changes; poverty gap; Bangladesh; microfinance; rural communities; rural areas; rural poor; living standards; loan repayment.

DOI: 10.1504/AJESD.2015.072702

African Journal of Economic and Sustainable Development, 2015 Vol.4 No.4, pp.341 - 352

Received: 01 May 2015
Accepted: 01 May 2015

Published online: 25 Oct 2015 *

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