Khandker, Shahidur R.2014-01-032014-01-032005-09-08World Bank Economic Reviewdoi:10.1093/wber/lhi008https://hdl.handle.net/10986/16478Microfinance supports mainly informal activities that often have a low return and low market demand. It may therefore be hypothesized that the aggregate poverty impact of microfinance is modest or even nonexistent. If true, the poverty impact of microfinance observed at the participant level represents either income redistribution or short run income generation from the microfinance intervention. This article examines the effects of microfinance on poverty reduction at both the participant and the aggregate levels using panel data from Bangladesh. The results suggest that access to microfinance contributes to poverty reduction, especially for female participants, and to overall poverty reduction at the village level. Microfinance thus helps not only poor participants but also the local economy.en-USCC BY-NC-ND 3.0 IGOACCOUNTINGAGGREGATE POVERTYAMOUNT OF CREDITANTIPOVERTY PROGRAMSASSET BUILDINGAVERAGE INCIDENCE OF POVERTYBENEFICIARIESBIDSBORROWERBORROWINGCAPITAL MOBILITYCOLLATERALCOMMERCIAL BANKSCONSUMPTION BEHAVIORCONSUMPTION POVERTYCONSUMPTION SMOOTHINGCONTROL GROUPSCREDIT COEFFICIENTSCREDIT CONSTRAINTSCREDIT DISCIPLINECREDIT MARKETSCREDIT PROGRAMSCREDIT SOURCESDEFAULT COSTSDEMAND FOR CREDITDESCRIPTIVE STATISTICSECONOMETRIC ANALYSISECONOMIC CONDITIONSECONOMIC GROWTHEMPLOYMENTEXPENDITUREEXPENDITURESEXTERNALITIESEXTREME POVERTYFEMALE EDUCATIONFINANCIAL SERVICESFOOD EXPENDITUREFOOD EXPENDITURESFOOD POLICYHOUSEHOLD CONSUMPTIONHOUSEHOLD FACTORSHOUSEHOLD FIXED EFFECTSHOUSEHOLD HEADHOUSEHOLD INCOMEHOUSEHOLD SIZEHOUSEHOLD SURVEYHOUSEHOLD SURVEYSHOUSEHOLD WEALTHHUMAN CAPITALHUMAN RESOURCESIMPACT ASSESSMENTIMPACT EVALUATIONIMPACT ON POVERTYIMPACT ON POVERTY REDUCTIONINCIDENCE OF POVERTYINCOME GENERATIONINCOME REDISTRIBUTIONINSTRUMENTAL VARIABLESINTERNATIONAL BANKINTERVENTIONLABOR MARKETSLAND HOLDINGLANDLESS HOUSEHOLDSLOANLOAN DEFAULTLOAN DEFAULT RATESLOAN SIZELOAN VOLUMELOCAL ECONOMYLOCAL MARKETMARKET CONDITIONSMICRO-FINANCEMICROCREDITMICROFINANCENEW ENTRANTSNGOPARTICIPATION RATESPER CAPITA CONSUMPTIONPOLITICAL ECONOMYPOORPOOR BORROWERSPOOR FAMILIESPOOR HOUSEHOLDSPOOR PEOPLEPOVERTY EFFECTSPOVERTY ESTIMATESPOVERTY IMPACTPOVERTY LEVELPOVERTY LINEPOVERTY RATEPOVERTY RATESPOVERTY REDUCTIONPOVERTY REDUCTION ACTIVITIESPOVERTY REDUCTION IMPACTPOVERTY STATUSPRODUCTIVITYPROGRAM EFFECTSPROGRAM EVALUATIONPROGRAM IMPACTSPROGRAM PLACEMENT BIASRATE OF RETURNREDUCTION IN POVERTYRETURNRETURNSRURALRURAL AREASRURAL CREDITRURAL DEVELOPMENTRURAL FINANCERURAL FINANCE INSTITUTIONSRURAL HOUSEHOLDSRURAL POVERTYSAVINGSSCHOOLINGSMALL BUSINESSSOCIAL INDICATORSSOCIOECONOMIC IMPACTSSTOCKSTARGETINGTOTAL POVERTYTRANSACTIONTRANSACTION COSTSTREATMENT GROUPSVILLAGE CHARACTERISTICSVILLAGE LEVELVILLAGE LEVEL INFRASTRUCTUREJournal ArticleWorld Bank10.1596/16478