The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence

David Roodman, Jonathan Morduch

Research output: Contribution to journalArticle

Abstract

We replicate and reanalyse the most influential study of microcredit impacts (M. M. Pitt & S. R. Khandker's, 'The impact of group-based credit on poor households in Bangladesh: Does the gender of participants matter?', published in the Journal of Political Economy, 106, 1998). That study was celebrated for showing that microcredit reduces poverty, a much hoped for possibility (though one not confirmed by recent randomised controlled trials). We show that the original results on poverty reduction disappear after dropping outliers, or when using a robust linear estimator. Using a new program for estimation of mixed process maximum likelihood models, we show how assumptions critical for the original analysis, such as error normality, are contradicted by the data. We conclude that questions about impact cannot be answered in these data.

Original languageEnglish (US)
Pages (from-to)583-604
Number of pages22
JournalJournal of Development Studies
Volume50
Issue number4
DOIs
StatePublished - Apr 2014

ASJC Scopus subject areas

  • Development

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