Micro-Finance In Bangladesh

Background and Purpose: Microfinance or micro-credit loans to poor women in Bangladesh as an anti-poverty tool have received mixed reviews from researchers and practitioners alike. Some suggest that there is an intrinsic value to giving poor women an opportunity to earn additional income for the household, which in turn helps to bring the family out of poverty. Others suggest that the scale at which this happens is not large enough to have an actual impact on the poverty index. Others see it as a tool that ‘empowers' poor women to become independent (Amin et al., 2003; Hunt et al., 2001; Mayoux, 2000; Schuler et al., 1998). Some suggest that women's enhanced autonomy may have unintended consequences in terms of domestic violence because of the challenge to traditional patriarchal norms and traditional gender roles (Amin, 1998). Despite the wide application of micro-finance programs, with an estimated 12 million users in Bangladesh, information about its effects is limited by a lack of representative studies. This paper draws on data from the USAID funded nationally representative Bangladesh Demographic and Health Survey (BDHS) 2007 to examine differences between poor women who have accessed micro-finance and those who have not on variables including wealth, autonomy, and domestic violence, and to examine whether autonomy is associated with domestic violence.

Methods: This paper uses the BDHS 2007 survey of 10,400 households in which they interviewed 10,996 ever-married women between the ages of 15 and 49 and ever-married men between the years of 15 and 54. The survey was designed to produce representative estimates for the indicators for the entire nation, for urban and rural areas, and for each of the six major divisions of Bangladesh. This paper, however, uses the Women's Questionnaire only, as microfinance loans are primarily intended for poor women in Bangladesh,. The key variables are: microfinance (recipient vs. non recipient) as a dichotomous variable, the wealth index created by the original survey designers, autonomy conceptualized as ‘freedom of movement' and domestic violence measured using the Conflict Tactics Scale. Chi Square and MANOVA analyses are used to delineate the relationship between microfinance receipt and wealth, autonomy and domestic violence.

Findings: This study found that there were no significant differences in autonomy between poor women who accessed microfinance and those who did not. Those who used micro-finance were significantly more likely to have less wealth. There were significant differences in domestic violence between recipients and non recipients of domestic violence, with higher levels among those who access micro-finance, controlling for literacy, education, and wealth. Autonomy was not associated with domestic violence among either group.

Implications: With millions of micro-finance recipients across many countries, including Bangladesh, there is a strong need to better understand the context and effects of micro-finance receipt. The findings in this study, including those on domestic violence, allude to the need for future qualitative studies to further elucidate the context and effects of microfinance receipt in Bangladesh.