Abstract
Bangladesh adopts labor intensive industrialization and inclusive finance strategy to fight against poverty. The strategies help the disadvantaged women empower and encourage doing something independently. But most of women entrepreneurs concentrated on major four types of businesses: parlor, boutique, clothing and fashion, which limit access to finance. The lack of access to finance was suspected to hamper their business growth. To understand such relationship, the descriptive as well as econometric tools and techniques were used. Durbin-Wu-Hausman test was used to test the endogeneity of the loan size. The test statistics suggest that the loan size is exogenous. Therefore, using the simple OLS method with various forms of error variances the regression results are estimated. Finally, the Feasible GLS method has been used to correct the heteroscedasticity problem. The result shows that the credit constraints and the credit size affect the monthly turnover of women entrepreneurs. The relaxation of credit constraint increases 6 percent monthly turnovers holding other things remaining same and so, it can be concluded that relaxing credit constraints improves business performance of women entrepreneurs.
Highlights
Over the last two decades, the focus of development policy initiatives, especially policies aiming at reducing poverty has undergone significant changes
The result shows that the credit constraints and the credit size affect the monthly turnover of women entrepreneurs
The relaxation of credit constraint increases 6 percent monthly turnovers holding other things remaining same and so, it can be concluded that relaxing credit constraints improves business performance of women entrepreneurs
Summary
Over the last two decades, the focus of development policy initiatives, especially policies aiming at reducing poverty has undergone significant changes. Focus of poverty reduction strategies shifted again and efforts were taken to develop an approach that would concentrate on the mainstream financial market while retaining a poverty focus (SIDA, 2003; DFID, 2005). To get markets working, it is modified by the concerns for poverty reduction and the understanding that without adequate structured opportunities for the poor people, this recipe is set to increase inequality” (Johnson, 2013: 4). This particular approach which aimed at making markets work for the poor is mostly known as the “inclusive finance” agenda and explicitly focused on including the unbanked, disadvantaged, and the poor within the financial market. “inclusive finance” portrays a “Finance for All (FFA)” argument and aims at bringing the excluded population into the realm of mainstream banking, developing new schemes for ensuring a better access to financial services specially credits, and educating them about various financial products and services which may play an important role in taking informed decisions
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