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Research Article Open access CC BY 4.0

Comparative Impact of Formal and Informal Microcredits on Poverty Alleviation in the Haor Region of Bangladesh: A Socioeconomic Analysis

Md. Nazrul Islam, Sabina Islam, Md. Shafayet Shahed Ornob

Asian Journal of Economics, Business and Accounting · pp. 371–388 · Published 30 May 2024

10.9734/ajeba/2024/v24i61368

Abstract

The study aims to make a comparative study of microcredits (formal and informal) in terms of interest rate, instalment types, payment, volume, purposes, users and impact on poverty alleviation in the economic lagging area of Bangladesh. In conducting the study, we used clusters sampling technique while the study area was divided into 23 clusters and size of respondents were determined using systematic probability proportionate to size and the UNICEF pencil-spin method was used to select the households randomly and finally a total 2340 households were surveyed with a semi-structured questionnaire where 780 households were treatment group who were not users of microcredit but eligible. The collected data were analyzed using a Z-test and factor analysis                    mainly. The findings showed that there is a significant difference between formal and informal credits in respect of interest rate, cost, instalments, number, volume, duration, and collateral.                     The borrowers preferred informal sources over formal sources and the study suggested redesigning the formal sources considering the socioeconomic condition of the Haor people. The study         originally identified the socioeconomic characteristics of both formal and informal microcredits in Bangladesh. The study will directly help to achieve SDG-1(no poverty) and SDG -17(sustainable finance).

Development development studies South Asia socioeconomic analysis

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Cited by 6

Poverty and its Risk Factors for the Northeastern Wetland Region of Bangladesh

Md. Rashidul Hasan, Md. Zakir Hossain · Pertanika Journal of Social Sciences and Humanities · 2025

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