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The Comparison between Microcredit Finance and Community Development Finance to Alleviate the Extreme Poverty in Bangladesh: A Case Study of Shibalaya

Received: 6 April 2015     Accepted: 10 April 2015     Published: 21 April 2015
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Abstract

This paper explains the comparison between Microcredit Finance and Community Development Finance to alleviate the extreme poverty in Bangladesh. According to the theory, Microcredit is a small loan (microloan) to be provided to those who have less collateral, it supports entrepreneurship and alleviates poverty through empowering women and uplifting entire communities by extension. On the other hand, Community Development Finance (CDF) focuses on personal lending and business development efforts in local communities by individual person or institution. The study obtained the opinions of 50 families from Shibalaya Thana under Manikgonj district in Bangladesh through a survey on the impact of Microcredit Finance and Community Development Finance to alleviate their extreme poverty. To conduct this study, qualitative (expert interview, focus group discussion) and quantitative methods was used. The study is based on primary data collection through questionnaires and Statistical Package for Social Science (SPSS) was used to analyze the data. The study found that both of these mechanisms have a significant role to alleviate the poverty who could utilize the loan properly. However, these two mechanisms for alleviating poverty have some demerits as well. Finally, this study came up with some recommendation to get more benefit from these two mechanisms to alleviate poverty in Bangladesh. Nevertheless, the results of the study are constrained by the size of the sample, area and robustness of the analysis.

Published in International Journal of Economics, Finance and Management Sciences (Volume 3, Issue 3)
DOI 10.11648/j.ijefm.20150303.14
Page(s) 172-178
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2015. Published by Science Publishing Group

Keywords

Microcredit Finance, Community Development Finance, Poverty Alleviation

References
[1] Caskey, John P. and Hollister, Robinson (2001). Business Development Financial Institutions: Theory, Practice, and Impact. Institute for Research on Poverty Discussion Paper no. 1240-01.
[2] Cheston, S. and L. Kuhn (2002) ‘Empowering Women through Microfinance’, Micro credit Summit Campaign, Pathways out of Poverty. Kumarian: Bloomfield, CT.
[3] Grossman, Brian, Levere, Andrea and Marcoux, Kent. (1998). Counting on Local Capital. Corporation for Enterprise Development: Washington D.C.
[4] Hulme, D. (2000) ‘Impact assessment methodologies for microfinance: Theory, experience and better practice’. World Development, Vol. 28, No. 1, pp79-98
[5] Jammeh, M. E. (2002). Access to Finance in the Artisanal Fisheries Sub-Sector of the Gambia. Presentation Made at the Workshop on Artisanal Fisheries and the World Markets (11-12 April 2002): Administration Of Agricultural Credit Schemes with Reference to the AFDP Credit Program.
[6] Maanen, van Gert (2004) Micro credit: Sound Business or Development Instrument, Voorburg, The Netherlands.
[7] Mosley, P. (2001). Microfinance and Poverty in Bolivia, Journal of Development Studies, Vol. 37 (4), 101-132.
[8] Murdoch, J. and B. Haley (2002) ‘Analysis of the Effects of Microfinance on Poverty Reduction’ NYU Wagner Working Paper No. 1014.
[9] Rubambey, G. (2001), “Conference proceeding of the fifth Annual International Conference on Entrepreneurship and Small Business Development”.
[10] Shil,N.C (2009).”Micro Finance for Poverty Alleviation: A Commercialized View” International Journal of Economics and Finance, Vol.1, No.2 p.p 191
[11] Simanowitz, A. and A. Walter (2002) ‘Ensuring Impact: Reaching the Poorest while Building Financially Self-Sufficient Institutions, and Showing Improvement in the Lives of the Poorest Women and Their Families’. In Sam Daley-Harris, Ed. Micro credit Summit Campaign, Pathways Out of Poverty. Kumarian: Bloomfield, CT.
[12] Wright, Graham A. N. (2000) Microfinance Systems: Designing Quality Financial Services for the Poor. Zed Books Ltd. London & New York, and The University Press Limited: Dhaka.
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  • APA Style

    Idris Ali, Ashiqun Nabi. (2015). The Comparison between Microcredit Finance and Community Development Finance to Alleviate the Extreme Poverty in Bangladesh: A Case Study of Shibalaya. International Journal of Economics, Finance and Management Sciences, 3(3), 172-178. https://doi.org/10.11648/j.ijefm.20150303.14

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    ACS Style

    Idris Ali; Ashiqun Nabi. The Comparison between Microcredit Finance and Community Development Finance to Alleviate the Extreme Poverty in Bangladesh: A Case Study of Shibalaya. Int. J. Econ. Finance Manag. Sci. 2015, 3(3), 172-178. doi: 10.11648/j.ijefm.20150303.14

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    AMA Style

    Idris Ali, Ashiqun Nabi. The Comparison between Microcredit Finance and Community Development Finance to Alleviate the Extreme Poverty in Bangladesh: A Case Study of Shibalaya. Int J Econ Finance Manag Sci. 2015;3(3):172-178. doi: 10.11648/j.ijefm.20150303.14

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  • @article{10.11648/j.ijefm.20150303.14,
      author = {Idris Ali and Ashiqun Nabi},
      title = {The Comparison between Microcredit Finance and Community Development Finance to Alleviate the Extreme Poverty in Bangladesh: A Case Study of Shibalaya},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {3},
      number = {3},
      pages = {172-178},
      doi = {10.11648/j.ijefm.20150303.14},
      url = {https://doi.org/10.11648/j.ijefm.20150303.14},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20150303.14},
      abstract = {This paper explains the comparison between Microcredit Finance and Community Development Finance to alleviate the extreme poverty in Bangladesh. According to the theory, Microcredit is a small loan (microloan) to be provided to those who have less collateral, it supports entrepreneurship and alleviates poverty through empowering women and uplifting entire communities by extension. On the other hand, Community Development Finance (CDF) focuses on personal lending and business development efforts in local communities by individual person or institution. The study obtained the opinions of 50 families from Shibalaya Thana under Manikgonj district in Bangladesh through a survey on the impact of Microcredit Finance and Community Development Finance to alleviate their extreme poverty. To conduct this study, qualitative (expert interview, focus group discussion) and quantitative methods was used. The study is based on primary data collection through questionnaires and Statistical Package for Social Science (SPSS) was used to analyze the data. The study found that both of these mechanisms have a significant role to alleviate the poverty who could utilize the loan properly. However, these two mechanisms for alleviating poverty have some demerits as well. Finally, this study came up with some recommendation to get more benefit from these two mechanisms to alleviate poverty in Bangladesh. Nevertheless, the results of the study are constrained by the size of the sample, area and robustness of the analysis.},
     year = {2015}
    }
    

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    AB  - This paper explains the comparison between Microcredit Finance and Community Development Finance to alleviate the extreme poverty in Bangladesh. According to the theory, Microcredit is a small loan (microloan) to be provided to those who have less collateral, it supports entrepreneurship and alleviates poverty through empowering women and uplifting entire communities by extension. On the other hand, Community Development Finance (CDF) focuses on personal lending and business development efforts in local communities by individual person or institution. The study obtained the opinions of 50 families from Shibalaya Thana under Manikgonj district in Bangladesh through a survey on the impact of Microcredit Finance and Community Development Finance to alleviate their extreme poverty. To conduct this study, qualitative (expert interview, focus group discussion) and quantitative methods was used. The study is based on primary data collection through questionnaires and Statistical Package for Social Science (SPSS) was used to analyze the data. The study found that both of these mechanisms have a significant role to alleviate the poverty who could utilize the loan properly. However, these two mechanisms for alleviating poverty have some demerits as well. Finally, this study came up with some recommendation to get more benefit from these two mechanisms to alleviate poverty in Bangladesh. Nevertheless, the results of the study are constrained by the size of the sample, area and robustness of the analysis.
    VL  - 3
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Author Information
  • Lecturer in Finance, Department of Business Administration, School of Business and Economics, Manarat International University, Dhaka, Bangladesh

  • Lecturer in Finance, Department of Business Administration, School of Business and Economics, Manarat International University, Dhaka, Bangladesh

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