Impact of Microfinance on Seasonal Hardship in Northern Bangladesh: A Propensity Score Matching Approach

Abstract

Daily income and food consumption of poor households in northern Bangladesh fall drastically during the autumn lean season of the year. In local terms, this seasonal hardship is known as monga, a near famine situation. Using the propensity score matching technique on cross-sectional data from Kurigram, one of the most poverty-stricken districts of northern Bangladesh, a study was conducted, which finds that participation in microfinance programmes reduces fluctuations in daily income and food consumption in the autumn lean period. Households’ capacity to cope with risk increases as the length of membership in microfinance programmes increases. The study further suggests that it is the relatively poorer households that benefit more from microfinance.