A Study on Bangladesh's Grameen Bank and the Ready-Made Garment Industry: The Effects of Rising Industrialization on the Reliance of Microfinance
Open Access Senior Thesis
Bachelor of Arts
© 2022 Elaine Yang
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.
Yang, Elaine, "A Study on Bangladesh's Grameen Bank and the Ready-Made Garment Industry: The Effects of Rising Industrialization on the Reliance of Microfinance" (2023). Scripps Senior Theses. 2203.