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Impact of Rural Credit on Household Welfare: Evidence from a Long-Term Panel in Bangladesh

    https://doi.org/10.1142/S0116110523500166Cited by:2 (Source: Crossref)

    Using 791 consistent households in the balanced panel, comprising 3,985 households in the unbalanced panel–from a nationally representative, multipurpose, five-round (1988, 2000, 2004, 2008, and 2014) Mahabub Hossain Panel Data in Bangladesh—we provide evidence for the long-term impact of different rural credit sources—which include formal banks, quasiformal microfinance institutes, and informal channels—on household welfare indicators. We find that the long-term impact of access to rural credit on a few welfare indicators is statistically insignificant and sometimes negative. This finding mostly holds when we investigate the impact of different rural credit sources separately. Our results raise a question on the progressive lending of some credit sources, especially microfinance institutes, and have implications for the introduction of nationwide credit bureaus in Bangladesh.

    JEL: C33, I31, O12, Q14

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