Impact of microfinance on health, education and income of rural households: evidence from Bangladesh

Since its inception, microfinance has played a significant role in the economic development of people in rural areas existing on low incomes. One way to increase the domain of microfinance on a sustainable basis is to improve the health-related services and educational facilities among the member households of microfinance. However, there is an absence of substantial amount of comprehensive research on these issues namely on health, education and income, which the study aims to address. This thesis examines the impact of microfinance on health, education and income of rural households in Bangladesh. Specifically, focusing on the effect of microcredit participation by member households of microfinance, this study provides suggestions as to policies and procedures for the Micro Finance Institutions (MFIs) to improve their operations in near future. The research is based on the household survey data on 439 households across 20 villages from four districts of Bangladesh namely Narshingdi, Narayangonj, Comilla, and Chandpur. A quasi-experimental survey method was conducted to investigate the impact of microfinance on income and consumption on member and non-member households of MFIs followed by a cross-sectional survey to investigate the impact of microfinance on health-seeking behaviour of adult households, child health and child schooling on member households of MFIs. In Chapter 4, the empirical results showed that participation in microfinance had positive impacts on income and consumption although the poverty effects on microfinance members was higher than for non-members. The results suggest that the overall impact of microfinance operations on the economic well-being of the microfinance participants was positive. The results in Chapter 5 suggest that the overall impact of microfinance operations on the health services and health-seeking behaviour of the participants was mostly positive. Microfinance participants’ health-related issues, as indicated by antenatal care, maternal care, family planning, diarrhoea remedial, immunisation provided, malaria/TB treatment, and the accessibility of medicines all improved significantly after joining the microfinance scheme. In Chapter 6, the study investigates the impact of microfinance programs on the nutrition status of the children of rural households embedded with the socioeconomic factors such as household characteristics, child characteristics, village characteristics on nutritional status (measured by height-for-age, and weight-for-age) of children. This study found no significant associations between microcredit participation and anthropometric indicators of children. In Chapter 7, the study analysed the impact of microfinance programmes on children’s schooling outcomes of the rural households in Bangladesh. This study’s results reveal that participation in microcredit has had a significant positive effect on school enrolment and negative effect on grade attainment. In Chapter 8, the study conducted four Focus Group Discussions (FGDs) in four districts of Bangladesh. The FGDs revealed that utilisation of credit appears to be a major factor for microcredit recipients in raising their income and reducing poverty, and microcredit recipients tended to be health conscious and education focussed due to the motivation provided by MFIs. This thesis contributes to the literature by applying the method of quasi-experimental survey to show the impact analysis of microfinance on economic well-being, proxied by income and consumption. Regarding the health and education aspects, this study uses cross-sectional survey to examine the impact of microfinance on the health-seeking behaviour of households, as well as child nutrition and child schooling. Most of the previous studies did not examine some important aspects of health such as health-seeking behaviour and access to health services and health inputs which are the contribution of this study. Although there are few studies on child health in other countries, there have been very few studies on the impact of microfinance on child health in Bangladesh. Despite the numerous studies on schooling, few have investigated the effects of microcredit duration, a more direct measure of investigating the impacts of microcredit programmes on child schooling. In addition,, this study has investigated the impact of microcredit on health, education and income on rural households at a time using FGD for the first time. This study proposes three main policy recommendations. Firstly, following the persistent trends of growth of MFIs in Bangladesh, the current poverty level can further be reduced through the combined efforts of the government bodies, MFIs, donor agencies and the member of the MFIs. Secondly, Microcredit Regulatory Authority (MRA) can put conditions on providing registration to newly applied MFIs and NGOs to include health and educational services with the microcredit programs. Thirdly, the promotion of experience sharing among the MFIs may be beneficial for the improvement of microfinance operations as a whole