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Economic Impact of MAB Microfinance Program on Borrowers Household: Evidence from Rural Area of Bangladesh

Received: 8 September 2016     Accepted: 21 September 2016     Published: 17 October 2016
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Abstract

Bangladesh is a pioneer and home of conceptualizing microfinance program. It has taken so many programs to reduce poverty and bring about socio-economic changes in the rural community. Since 1993, Muslim Aid UK, Bangladesh (MAB) is working with poor vulnerable people to improve their socioeconomic status through delivering interest-free microfinance in Bangladesh. This study is, therefore, aims to examine the economic impact of MAB microfinance program on borrowers’ household income and consumption expenditure. Towards the achievement of its objectives, this study used descriptive and statistical techniques. To assess the impacts, primary data were collected from 95 borrowers from Chittagong district of Bangladesh. The simple random sampling method was followed to select the borrowers’. Multiple Linear Regression model were used to analyze the data. The findings revealed that MAB borrower’s income and consumption expenditure increased after receiving the microfinance loan. Based on the results, the findings also revealed that amount of loan, loan sufficiency and religiosity had the most significant effect on income. In case of consumption expenditure, the amount of loan, tenure and loan sufficiency shown the significant effect.

Published in International Journal of Economics, Finance and Management Sciences (Volume 4, Issue 5)
DOI 10.11648/j.ijefm.20160405.20
Page(s) 298-302
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), 2016. Published by Science Publishing Group

Keywords

Impact, Microfinance, Income, Consumption Expenditure, Bangladesh

References
[1] World Bank (2004), “Building Inclusive Financial Systems” CGAP Report No-35031
[2] Amin, S., Rai, A. S., & Topa, G. (2003). Does microcredit reach the poor and vulnerable? Evidence from northern Bangladesh. Journal of Development Economics, 70 (1), 59-82.
[3] BER, (2012), Bangladesh Economic Review, Economic Adviser’s Wing, Finance Division, Ministry of Finance, Government of Peoples Republic of Bangladesh.
[4] UNDP Human Development Report (2011), United Nations Development Program http://hdr.undp.org/en/content/human-development-report
[5] Mahmud, K. T. (2006). Effectiveness of micro-credit for poverty alleviation under Agricultural Intensification Projects in Bangladesh (Doctoral dissertation, Universiti Putra Malaysia).
[6] Credit and Development Forum (CDF) Annual Report. (2014). http://www.cdfbd.org/new/page.php?scat_id=153
[7] MF Report, (2010). Muslim Aid, UK Bangladesh http://www.muslimaid.org.bd/images/stories/pdf/MF_Report_2010.pdf
[8] Adnan, M. A., & Ajija, S. R. (2015). The effectiveness of Baitul Maal wat Tamwil in reducing poverty: the case of Indonesian Islamic Microfinance Institution. Humanomics, 31 (2).
[9] A.M. Inun Jariya (2013). True Economy Prosperity through Poverty Alleviation-Islamic Microfinance as Commercial Venture Proceeding-Kuala Lumpur International Business, Economics and Law Conference.
[10] Zaidah, N., & Nor, C. M. (2011). The Effectiveness of Amanah Ikhtiar Malaysia (AIM) in Reducing Rural Poverty: A Case Study of Pokok Sena
[11] Samer, S., Majid, I., Rizal, S., Muhamad, M. R., & Rashid, N. (2015). The Impact of Microfinance on Poverty Reduction: Empirical Evidence from Malaysian Perspective. Procedia-Social and Behavioral Sciences, 195, 721-728.
[12] Hamdan, H., Othman, P., & WSW, H. (2012). Is microfinance program in Malaysia really effective in helping the poor? World Review of Business Research, 2 (1), 79-97.
[13] Md Saad, N., & Duasa, J. (2010). Determinants of economic performance of micro-credit clients and prospect of Islamic microfinance in Malaysia. ISRA
[14] Rahman, M., & Ahmad, F. (2010). Impact of microfinance of IBBL on the rural poor's livelihood in Bangladesh: an empirical study. International journal of Islamic and Middle Eastern finance and management, 3 (2), 168-190.
[15] Ahmed, H. (2002). Financing microenterprises: An analytical study of Islamic microfinance institutions. Islamic Economic Studies, 9 (2), 27-64.
[16] Bhuiyan, A. B., & Hassan, A. (2013). Microcredit and Sustainable Livelihood: An Empirical Study of Islamic and Conventional Credit on the Development of Human Capital of the Borrowers in Bangladesh. Journal of Economic Cooperation and Development, 34 (3), 101-128.
[17] Uddin, M. M. (2008). Credit for the Poor: The Experience of Rural Development Scheme of Islami Bank Bangladesh Ltd. Journal of Nepalese Business Studies, 5 (1), 62-75.
[18] Morshid N, Abdullah R, (2013) The Effectiveness of Islamic Microfinance in Brunei Darussalam: A Case Study Paper presented the 5th Islamic Economic System Conference-organized by USM
[19] Widiyanto, M., & Abdul Ghafar, I. (2010). Improving the effectiveness of Islamic micro-financing. Humanomics, 26 (1), 66-75.
[20] Hassan, A. (2014). The challenge in poverty alleviation:the role of Islamic microfinance and social capital. Humanomics, 30 (1), 76-90.
[21] Khan, Z., & Usman, M (2010). Financing non Bankable Masses: An Analytical Study of Conventional Verses Islamic Microfinance Programs (Lesson from Muslim World). International Journal of Islamic Finance, 2 (1), 113-130.
[22] Ullah A, Khan Z, & Yasin H. M (2011). Cooperative Microfinance Myth or Reality: An Economic Analysis of the Welfare of Marginalized Segments. 8th International Conference on Islamic Economics and Finance.
[23] Rahman, M. T., & Khan, H. T. (2013). The effectiveness of the microcredit programme in Bangladesh. Local Economy, 28 (1), 85-98.
[24] Mawa, B. (2008). Impact of microfinance: towards achieving poverty alleviation? Pakistan Journal of Social Sciences, 5 (9), 876-882.
[25] Chowdhury, T. A., & Mukhopadhaya, P. (2012). Assessment of multidimensional poverty and effectiveness of microfinance-driven government and NGO projects in the rural Bangladesh. The Journal of Socio-Economics, 41 (5), 500-512.
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Cite This Article
  • APA Style

    Shamsuddin Ahamad, Rosni Bakar, Zulkarnain Lubis. (2016). Economic Impact of MAB Microfinance Program on Borrowers Household: Evidence from Rural Area of Bangladesh. International Journal of Economics, Finance and Management Sciences, 4(5), 298-302. https://doi.org/10.11648/j.ijefm.20160405.20

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    ACS Style

    Shamsuddin Ahamad; Rosni Bakar; Zulkarnain Lubis. Economic Impact of MAB Microfinance Program on Borrowers Household: Evidence from Rural Area of Bangladesh. Int. J. Econ. Finance Manag. Sci. 2016, 4(5), 298-302. doi: 10.11648/j.ijefm.20160405.20

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    AMA Style

    Shamsuddin Ahamad, Rosni Bakar, Zulkarnain Lubis. Economic Impact of MAB Microfinance Program on Borrowers Household: Evidence from Rural Area of Bangladesh. Int J Econ Finance Manag Sci. 2016;4(5):298-302. doi: 10.11648/j.ijefm.20160405.20

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  • @article{10.11648/j.ijefm.20160405.20,
      author = {Shamsuddin Ahamad and Rosni Bakar and Zulkarnain Lubis},
      title = {Economic Impact of MAB Microfinance Program on Borrowers Household: Evidence from Rural Area of Bangladesh},
      journal = {International Journal of Economics, Finance and Management Sciences},
      volume = {4},
      number = {5},
      pages = {298-302},
      doi = {10.11648/j.ijefm.20160405.20},
      url = {https://doi.org/10.11648/j.ijefm.20160405.20},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijefm.20160405.20},
      abstract = {Bangladesh is a pioneer and home of conceptualizing microfinance program. It has taken so many programs to reduce poverty and bring about socio-economic changes in the rural community. Since 1993, Muslim Aid UK, Bangladesh (MAB) is working with poor vulnerable people to improve their socioeconomic status through delivering interest-free microfinance in Bangladesh. This study is, therefore, aims to examine the economic impact of MAB microfinance program on borrowers’ household income and consumption expenditure. Towards the achievement of its objectives, this study used descriptive and statistical techniques. To assess the impacts, primary data were collected from 95 borrowers from Chittagong district of Bangladesh. The simple random sampling method was followed to select the borrowers’. Multiple Linear Regression model were used to analyze the data. The findings revealed that MAB borrower’s income and consumption expenditure increased after receiving the microfinance loan. Based on the results, the findings also revealed that amount of loan, loan sufficiency and religiosity had the most significant effect on income. In case of consumption expenditure, the amount of loan, tenure and loan sufficiency shown the significant effect.},
     year = {2016}
    }
    

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    T1  - Economic Impact of MAB Microfinance Program on Borrowers Household: Evidence from Rural Area of Bangladesh
    AU  - Shamsuddin Ahamad
    AU  - Rosni Bakar
    AU  - Zulkarnain Lubis
    Y1  - 2016/10/17
    PY  - 2016
    N1  - https://doi.org/10.11648/j.ijefm.20160405.20
    DO  - 10.11648/j.ijefm.20160405.20
    T2  - International Journal of Economics, Finance and Management Sciences
    JF  - International Journal of Economics, Finance and Management Sciences
    JO  - International Journal of Economics, Finance and Management Sciences
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    EP  - 302
    PB  - Science Publishing Group
    SN  - 2326-9561
    UR  - https://doi.org/10.11648/j.ijefm.20160405.20
    AB  - Bangladesh is a pioneer and home of conceptualizing microfinance program. It has taken so many programs to reduce poverty and bring about socio-economic changes in the rural community. Since 1993, Muslim Aid UK, Bangladesh (MAB) is working with poor vulnerable people to improve their socioeconomic status through delivering interest-free microfinance in Bangladesh. This study is, therefore, aims to examine the economic impact of MAB microfinance program on borrowers’ household income and consumption expenditure. Towards the achievement of its objectives, this study used descriptive and statistical techniques. To assess the impacts, primary data were collected from 95 borrowers from Chittagong district of Bangladesh. The simple random sampling method was followed to select the borrowers’. Multiple Linear Regression model were used to analyze the data. The findings revealed that MAB borrower’s income and consumption expenditure increased after receiving the microfinance loan. Based on the results, the findings also revealed that amount of loan, loan sufficiency and religiosity had the most significant effect on income. In case of consumption expenditure, the amount of loan, tenure and loan sufficiency shown the significant effect.
    VL  - 4
    IS  - 5
    ER  - 

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Author Information
  • School of Business Innovation and Technopreneurship, University Malaysia Perlis (UniMAP), Perlis, Malaysia

  • School of Business Innovation and Technopreneurship, University Malaysia Perlis (UniMAP), Perlis, Malaysia

  • School of Business Innovation and Technopreneurship, University Malaysia Perlis (UniMAP), Perlis, Malaysia

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