The role of training in reducing poverty: the case of the ultra‐poor in Bangladesh

Although microcredit is considered the main vehicle for increasing the income of the poor and alleviating poverty in Bangladesh, it is now well recognised that more than this is needed to reach the ultra poor in rural areas. Consequently, almost half of the Bangladesh population is in some way linked to non‐governmental organizations' development programmes, at the centre of which is poverty alleviation. The study reported here developed a comprehensive cross‐sectional intervention to examine whether the income of those who participated in the training programmes of non‐governmental organizations was related to that participation. The study was carried out in three leading organizations in three districts of Bangladesh using a quantitative associational research design. Three hundred responses were analysed using multiple regression analysis to elicit information from ultra poor clients who had received training. The results suggest that the post‐training income level of the trainees was negatively rather than positively related to the fact of their participation in training, the opposite of what human capital theory would lead us to expect.     

Impact of microcredit on borrowers’ expenditures: a fuzzy regression discontinuity design approach

This article uses the data from 69 villages in Bangladesh to estimate the effect of participation in microcredit programmes on household expenditures. A regression discontinuity design (RDD) is used to identify the credit effect. Our results show heterogeneous treatment effect on different types of expenditures. We show that access to credit reduces per capita expenditure on durable goods such as kitchen equipment, furniture, repair and maintenance of house and increases the expenditure on per school-going child. We also show insignificant impact of access to credit on non-durable goods and health care, recreation and gifts. Interestingly, our results indicate a positive impact of microcredit on village-level expenditures.     

Does microcredit increase borrowers’ savings? A fuzzy regression discontinuity design approach

Microcredit has expanded rapidly in recent years but its effect at the household level is still controversial. This paper uses a unique data-set collected from 69 villages in Bangladesh to estimate the effect of participation in microcredit programs on household savings. A regression discontinuity design (RDD) is used to identify the credit effect. To justify the validity of RDD, we test the discontinuities in the conditional density of the forcing variable (in our case, household land), as suggested by McCrary. We do not find any substantial evidence of manipulation of forcing variable at the threshold to invalidate the RDD. Our results show that access to credit increases savings of the borrowers.