Do poor people benefit from microcredit program? Evidence from Bangladesh

The microcredit program in Bangladesh is a unique innovation of credit delivery designed to enhance the income generating activities of the poor. Not only the founder of the Grameen Bank is awarded the 2006 Nobel Peace Prize on microcredit program, but is has also been a topic of great interest to researchers since its introduction in mid-1970s. This study investigates the consumption pattern of different income level microcredit borrowers. Using primary data collected from borrowers of the Grameen Bank and Bangladesh Rural Advancement Committee (BRAC) The study estimates budget share of consumables. The study uses quasi-experimental approach by comparing consumption patter of the borrowers with the non-borrowers from non-program villages. In investigating the impact of per capita monthly expenditure and other household characteristics on the budget share of the items consumed by borrowers and non-borrowers, the study relies on the an Almost Ideal Demand system (AIDS) framework. Using Ordinary Least Squares (OLS) estimation, on monthly budget share of twelve household consumables (food and non-food items) our result shows high income borrowers of microcredit programs are better off in terms of consumption than low and middle income borrowers.