Abstract
The primary purpose of the study is to evaluate the effectiveness of microfinance on household income generation in the south-west region of Bangladesh. A set of statistical tools such as descriptive analysis, t-test, correlation analysis, and log-linear multiple regression models have been used to achieve the objective of the study. It has been found that the difference between household income, expenditure, saving, working hours, and capital is statistical and significant after joining the microfinance program. Also, results from correlation analysis show a positive and meaningful relationship between credit and household monthly income, expenditure, and savings. Besides, the regression analysis confirms that the age of the respondent, family members and loan amount has a positive and statistically significant impact on income generation for the microfinance receiver. The finding of the research is crucial and meaningful to the policymaker to take practical steps in reducing poverty and sustainable rural development.
Highlights
IntroductionIn the mid 17th century, small microcredit operations have been started (Kaburi et al, 2013)
The average household income of the respondent is above BDT 150,000 per month for both microfinance taker and non-taker
Those who have taken microfinance experienced an increase in the income level aftermath
Summary
In the mid 17th century, small microcredit operations have been started (Kaburi et al, 2013). It refers to formal financial services including loans, savings, insurance, and transfer services provided to the poor, low-income, and disadvantaged households who are not backed up by the mainstream banking system (Hossain et al, 2019). Microcredit and microfinance are often used interchangeably, they are not same. Sinha, (1998) concludes microcredit as a small loan provided by microfinance and credit institutions. Microcredit is one kind of financial service which incorporates microfinance (Nawaz, 2010)
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