Microfinance and Poverty Reduction: Evidence from a Village Study in Bangladesh

To evaluate the competing claims on the impact of microfinance programs on multidimensional poverty, a village study in Bangladesh was conducted where three microfinance programs had been operating for more than five years. The study found that microfinance has resulted in a moderate reduction in the poverty of borrowers, as measured by a variety of socio-economic indicators, but has not reached many of the poorest in the village. To make microfinance a more effective means of poverty reduction other services such as skills training, technological support, education and health related strategies should be included with microfinance.