Reducing Ultra Poverty with Packaged Microfinance: A Field Experiment

Principal Investigator

• Dr. Seiro Ito
• Dr. Abu S. Shonchoy
• Dr. Kazushi Takahashi
• Dr. Takashi Kurosaki

Project Area

District: Kurigram and Gaibandha


Project Background


Project Description

Growing Micro-Finance Institutions (MFIs) has been affecting the lives of 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 ultra-poor usually remain in cash crisis, they use the credit for the purposes other than mentioned one during applying at MFIs. Considering this hypothesis, the experiment intends to analyze the effectiveness of packaged micro-finance in lifting ultra-poor out of poverty.
With an aim to experiment the effectiveness of packaged microfinance in reducing poverty the project titled “Reducing Ultra Poverty with Packaged Micro-finance, a Field Experiment” has started its journey from the beginning of 2013 with conducting Participatory Rural Appraisals (PRAs) at village level in different chars (river island) in Kurigram and Gaibandha districts of Northern Bangladesh. Initially 80 shamitees (borrower group) were formed in different chars with 20 members each. As 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 implemented in partners 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 shamitees. 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 a one year period after delivering treatment. We have completed panel two data collection for entire sample.