Impact of microcredit on income inequality among rural women: The case of Panchagarh district in Bangladesh

Abstract

© Universiti Putra Malaysia Press. This article aims to examine the role of microcredit programme on measuring income inequality between two groups of rural women in Bangladesh namely ‘with credit’ and ‘without credit’. ‘With credit’ rural women were members of Grameen Bank’s microcredit programme while ‘without credit’ rural women who were not members of any microcredit programme. This empirical study was based on primary data collected through face to face interview from rural women in Panchagarh District of Bangladesh. By applying Lorenz Curve approach and Gini Coefficient analysis, the study findings revealed that ‘with credit’ households had less income inequality compared to ‘without credit’ households with the values of Gini coefficient at 0.354 and 0.429 respectively. It is evidenced that Grameen Bank’s microcredit programme provides an opportunity to reduce income inequality which ultimately contributes to improve rural family income and their livelihood. Study findings revealed that microcredit programme played a key role to alleviate poverty, reduced income inequality and helped the rural women to be economically independent and financially solvent in their society. The policy implication is that more provision of credits or loans by the microfinance institutions like Grameen Bank for the very poor or ultra-poor women in Bangladesh or any other least developed countries would help to get them involved in income generation activities and come out of poverty. Further research can be conducted on measuring income inequality perception i.e. how rural people perceive their income gaps and what are their thoughts for improving rural income inequality.