Reducing Ultra Poverty with Packaged Microfinance: A Field Experiment

District: Kurigram and Gaibandha

Bangladesh

Growing Micro-Finance Institutions (MFIs) have been affecting the lives of the poor population around the world in many ways. Observation shows that some people are using loans to meet their daily needs which otherwise, in most cases, are met by regular earnings. As the ultra-poor usually remain in a cash crisis, they use the credit for purposes other than mentioned one applying at MFIs. Considering this hypothesis, the experiment intends to analyze the effectiveness of packaged micro-finance in lifting the ultra-poor out of poverty.
To experiment with the effectiveness of packaged microfinance in reducing poverty the project titled “Reducing Ultra Poverty with Packaged Micro-finance, a Field Experiment” started its journey at the beginning of 2013 by conducting Participatory Rural Appraisals (PRAs) at the village level in different chars (river island) in Kurigram and Gaibandha districts of Northern Bangladesh. Initially, 80 shamitees (borrower groups) were formed in different chars with 20 members each. As the continuous threat of erosion remains usually with char area, 11 of the initially selected chars dropped out.  After this incidence 23 new Chars have been selected for conducting baseline survey.

The project has been implemented in partner collaboration with IDE-JETRO & Hitotsobashi University, Japan, and Gana Unnayan Kendra (GUK), Gaibandha.
After the baseline survey, package distribution has been started among different groups. Initially, 10 members were selected to receive treatment by randomization. And the remaining members are receiving treatment gradually after the first randomization. So far we have distributed the credit among 1170 out of 1840 members in 92 shameless. Among asset transfer groups 263 out of 404 members, among control (traditional credit) 295 out of 480 members, among large credit 333 out of 460 members and among large credit with grace period 279 out of 460 members we have distributed credit till October 2014.
Meanwhile, we have completed one year after delivering treatment. We have completed panel two data collection for the entire sample.