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Abstract:

Group-based lending programs for the poor have become a focus of attention in the development community over the last several years. This paper treats the choice of participating in credit programs in a sample of Bangladeshi households and villages as corresponding to a " quasi-experiment " conditional on all observed and unobserved village characteristics. It uses the same approach to help identify the separate effects of lending to female and male household members, making use of the fact that credit groups are single-sex and groups for both sexes are not available in all villages. The data were collected in a special survey carried out in 87 rural Bangladeshi villages during 1991-92. The paper provides separate estimates of the influence of borrowing by both men and women for each of three credit programs (the Grameen Bank, the Bangladesh Rural Advancement Committee (BRAC), and the Bangladesh Rural Development Board's RD-12 program (BRDB) on a variety of household and individual outcomes. These outcomes include the school enrollment of boys and girls, the labor supply of women and men, the asset holdings of women, recent fertility and contraceptive use, consumption, and the anthropometric status of children. The authors find that credit is a significant determinant of many of these outcomes. Furthermore, credit provided to women was more likely to influence these behaviors than credit provided to men, and had the greatest impact on variables associated with women's power and independence. In short, program credit has a significant effect on the well-being of poor households in Bangladesh and this effect is greater when women are the program participants.

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