Microcredit, does it create a positive effect on the economy? : the case of Bangladesh.

Abstract

Microfinance is a financial instrument used to help the poor when no other financing is available. Its implications have been visible in the countries that have implemented it. The central topic of this project is to establish the way that microcredit aids in creating value in the economy through various indicators such as household expenditures and land owned by households. This project introduces a model that clarifies the process in which microcredit affects the economy theoretically and quantitatively. The purpose of the model would be to see the mechanism in which microcredit influences the economy. The theoretical model will be tested in the fourth chapter using empirical data from Bangladesh. Several indicators of microcredit are utilized to test for the relationship. The general conclusions from the results are in alignment with the literature that supports microcredit as a tool for development.