Graduation Year

2023

Document Type

Open Access Senior Thesis

Degree Name

Bachelor of Arts

Department

Economics

Reader 1

Nayana Bose

Reader 2

Roberto Pedace

Rights Information

© 2022 Elaine Yang

Abstract

Microfinance institutions offered a solution to borrowing to the ultra-poor through a group lending scheme where social capital drove repayment rates. In Bangladesh, the Grameen Bank was globally recognized as a successful microfinance institution, increasing financial literacy and mobility to the ultra-poor. Tangentially, the ready-made garment industry boomed in some districts with a Grameen Bank presence, while other districts were not impacted at all. Using a difference-in-difference regression model and focusing on the Grameen Bank districts before and after their exposure to the RMG industry on the number of branches, branch members, outstanding loan amount, and zone membership percentage of these districts, I find that the high exposure group to the RMG industrialized have larger outstanding loans and more members per branch, but a lower amount of district membership and average number of branches in the Grameen Bank when compared to the low exposure group. The main findings of this paper show that low exposure group still had a high membership rate and average number of branches which could be due to an increased number of low-income women migrating to low exposure group to obtain employment. The Grameen Bank is likely to still target and service low exposure group since more low-income women are migrating to these districts and may not have any financial assets after their initial move. However, the high exposure group to the RMG industry point to a decreased need on microfinance over time since membership rate and average number of branches were lower when compared to the low exposure group to the RMG industry.

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