An Evaluation of Micro Credit Impact in Bangladesh

RESEARCH PROPOSAL

An Evaluation Of Micro Credit Impact In Bangladesh

Saturday, December 23, 2017

Executive summery

This proposal outlines the plan to evaluate the impact of delivering credit to micro-entrepreneurs in the poorest region of the country. The research will evaluate the Microcredit program of Grameen bank the largest microfinance program in Bangladesh. The main objectives of the proposed study are to:

1. Determine the business-level and household-level impact of access to small loans by credit- constrained micro-entrepreneurs;
2. Learn more about the type of client who joins (and who does not), the market size of microcredit, and how the program’s outreach to the poor can be improved;
3.  Evaluate the targeting of the program among the poor households in the Bangladesh.

Careful measurement of the economic impact of microfinance programs or institutions is fraught with methodological difficulties, and often studies find contradictory results. [1,2] No consensus exists that is supported by hard scientific evidence. The plan put forth here is one of the first randomized control experiments to assess the impact of micro-credit to entrepreneurs. At the core of the impact evaluation are two surveys: a baseline survey and a follow-up survey of the same entrepreneurs one year later. Specifically, the baseline survey collects information from loan applicants from all the regional offices of Grameen bank in Bangladesh.

The basic objective of this business research would be to evaluate the impact of a microfinance program through a randomized control experiment and the lessons learned from expanding access to alleviate poverty.

In this research proposal, the researcher has discussed the overall research methodology - research philosophy, research approach, research design, research method, data collection mechanism, sampling framework relevant to this business research. The researcher is going to follow a deductive and phenomenology based business research whereby both primary and secondary data will be used to test null hypothesis.

Table of Contents

INTRODUCTION        6

Background and Motivation        6

Rational of proposed evaluation:        7

RESEARCH AIM, OBJECTIVES AND CONCEPTUAL FRAMEWORK        8

A.        Research aim        8

B.        Research objectives        8

C.        Research Hypothesis        9

D.        Conceptual framework of the research        10

LITERATURE REVIEW        11

RESEARCH APPROACH, DESIGN AND METHODOLOGY        14

A.        Research Philosophy        14

B.        Research Approach        16

C.        Research method        17

D.        Questionnaire Design        18

E.        Sample Selection And Data Collection Procedure        19

TIME FRAME        20

RESOURCE REQUIREMENTS        22

CONCLUSION        23

REFERENCES CITED        24

INTRODUCTION

Background and Motivation

The large amount of micro and small enterprises operating within Bangladesh suggest that microfinance has the potential to cause significant favorable impacts in the country.  

During the late 1970s, when the 'Jobra' experiment was underway under Professor M. Yunus, the Dheki Rin Prokolpa was initiated by the Bangladesh Bank in collaboration with the Swanirvar Bangladesh, and several other pilot schemes were initiated by a handful of the NGOs which were active then. At that time, it was difficult to conceive that these initiatives would lead to a major microcredit movement, which would make Bangladesh known to the rest of the world. Even during the 1980s, despite Grameen Bank’s success, the main discourse amongst development practitioners in Bangladesh centered around the desirability of microcredit program as opposed to concretization. By 1990, unhindered experimentation in the fields led to a quiet resolution of the debate and the country experienced a massive expansion of microfinance activities during the 1990s. [3]

In 1998 the Grameen Bank's "Low-cost Housing Program" won a World Habitat Award. In 2006, the bank and its founder, Muhammad Yunus, were jointly awarded the Nobel Peace Prize.[4]

The motivation behind conducting this survey stems from an impending study to evaluate the impact of microcredit on people. This preliminary survey is an attempt to gain a better understanding of the socio-economic condition of the rural area of the country. More specifically, we wanted to find out the impact of credit on overall rural economic scenarios vs. the impact of credit on a very specific unique group of people

Rational of proposed evaluation:

The main objectives of the proposed evaluation of microcredits are to determine the impact of providing small loans to credit-constrained micro-entrepreneurs, mapping the survey data to existing data on microentrepreneurs in Bangladesh, developing a randomized design evaluating the impact of the program based on the pool of households directly benefiting from this micro credit policy. These are an important issue as micro credit is one of the important pillars in the finance services in Bangladesh to fight against poverty.

The proposed study will be strategically important for the development of an efficient central broad-based microfinance sector in Bangladesh. As the government has always been fighting to eradicate poverty and develop social growth, this study will pledge to achieve major poverty alleviation via growth promoting and inequality-reducing policies from microcredit programs. These types of programs are all aimed at lessening current poverty and achieving long-term social inclusion by promoting accumulation of assets and human capital by the poor. Therefore, efforts to evaluate the effectiveness of microcredit in terms of the cost effectiveness, targeting efficiency, and impact on poverty are particularly important. [5]