Abstract

This paper examines the relationship between microcredit participation and household income in rural Bangladesh, with a focus on how this relationship varies across households. Using data from the Bangladesh Integrated Household Survey (BIHS) Round 3, the analysis draws on a sample of 5,598 households and estimates the association between access to microcredit and per capita household income using OLS regression with division fixed effects. The results show that microcredit participation is positively associated with income, but the magnitude of this relationship differs substantially across households. Asset-poor households exhibit an income premium of approximately 45 percent relative to non-borrowers, compared to about 14 percent for asset-rich households. A similar pattern appears across education levels, where the income association declines as years of schooling increase. In contrast, there is no meaningful difference by borrower gender. These findings suggest that the relationship between microcredit and income is shaped by household-level constraints rather than access to credit alone. Households with fewer assets and lower levels of education appear to benefit more from borrowing, while those with greater resources show weaker associations. The results should be interpreted as conditional associations rather than causal effects. The findings suggest that targeting households facing tighter financial constraints may matter more for income outcomes than expanding access alone.

Advisor

Shaukat, Sarah

Department

Economics

Disciplines

Growth and Development | Income Distribution

Keywords

microcredit, household income, rural Bangladesh, BIHS, financial inclusion, poverty alleviation, economic development, NGO loans, South Asia, microfinance

Publication Date

2026

Degree Granted

Bachelor of Arts

Document Type

Senior Independent Study Thesis

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