International Journal of Research and Innovation in Social Science (IJRISS) |Volume VI, Issue XI, November 2022|ISSN 2454-6186
S.M. Ashraf Hossain1*, & Md. Ashikur Rahman2
1Lecturer, Department of Economics, Varendra University, Rajshahi, Bangladesh
2Department of Economics, Varendra University, Rajshahi, Bangladesh
*Corresponding Author
Abstract: Microcredit is considered as an effective tool to improve the living standard of the poor. However, several empirical studies pointed out negative outcomes of microcredit as well. The primary objective of this study is therefore to investigate the impact of microcredit on the living standard of the loan receivers in terms of consumption expenditure. Raninagar and Kaliganj unions of Naogaon district, Rajshahi were chosen as the study areas for this study. Primary data was obtained through a structured questionnaire and was used for the quantitative analysis using the STATA software. In this study, 50 loan receivers from the two unions were selected as the sample size of the population. Ordinary Least Square (OLS) regression method is employed to examine the impact of microcredit on the monthly consumption expenditure of the loan receivers. Among the loan receivers, the study shows that 54% of the them are female, the majority of them fall into 50 & over age group, and 28% of their education level is SSC. The econometric result of this study has found statistically significant impact of microcredit loan on the monthly consumption expenditure of the loan receivers (p=0.049). In addition to this, saving and income of the loan receivers were also estimated as statistically significant. Based on the findings the study recommends micro finance institutions to increase the volume of the loans and offer saving services to the loan receivers in the study area. Further, the study recommends extended research to be carried out with a larger data set in the study area.
Keywords: Microcredit, loan takers, living standard, monthly expenditure.
I. INTRODUCTION
Bangladesh’s poverty situation requires a comprehensive response. People falling victims to poverty also suffers from circumstances like unemployment or insufficient income. (Gupta, 2015). However, these poor people who have poor credit ratings usually qualify for microcredit loans, which are modest, short-term loans. Microcredit has played an important role in alleviating poverty in Bangladesh by facilitating access to healthcare, clean water, good nutrition, effective education, social and cultural development, job opportunities, housing, clothing, and transportation. (Armendariz & Morduch, 2007). Since the late 1970s, when Muhammad Yunus founded Grameen Bank, Bangladesh has been at the forefront of the microfinance movement. Since then, microcredit has evolved into a method for Bangladesh’s economic development that benefits low-income individuals. Today, Bangladesh is home to the largest microfinance operations in the world, and as such, it is home to a significant number of notable microfinance institutions, such as BRAC, the Association of Social Advancement (ASA), PROSHIKA, and TMSS. These