Consumpiton Difference Between Microcredit Borrowers and Non-borrowers: A Bangladesh Experience

Abstract

This paper investigates the consumption behaviour of borrowers of two major microcredit institutions in Bangladesh and compares that with non-borrowers. Primary data has been collected from borrowers of the Grameen Bank and Bangladesh Rural Advancement Committee (BRAC) operating in three major districts in Bangladesh. Along with borrowers, non-borrowers data has also been collected from non-program village to avoid endogeneity. Control-group method (non-borrowers from non-program villages) has been used to compare the differences in consumption patterns between the two groups. This study analyses the impact of per capita monthly expenditure and other household characteristics on the budget share of eleven items (food and non-food) consumed by borrowers and non-borrowers. Results from the estimation on linear and quadratic model suggest that borrowers of microcredit programs are better off in terms of consumption than non-borrowers.