Does Microfinance Reduce Poverty In Bangladesh? New Evidence From Household Panel Data

The purpose of the present paper is to examine whether microfinance reduces poverty in Bangladesh drawing upon the nationally representative household panel data covering 4 rounds from 1997 to 2005. A special attention was drawn to the issue of endogeneity by applying treatment effects model and Propensity Score Matching (PSM) for the participants and non-participants of microfinance programmes. It has been confirmed by treatment effects model applied to panel data that household access to loans for productive purposes from MicroFinance Institutions (MFIs) significantly increased per capita household income, while simple household access to general loans from MFIs did not.