The Macro Impact of Microfinance in Bangladesh: A CGE Analysis

Siddiqur R. Osmani, Selim Raihan, M. A. Baqui Khalily

Research output: Contribution to journalArticle

9 Citations (Scopus)

Abstract

A lot has been written on the impact of microfinance on poverty and well-being at the household level, but little is known about its macro impact. The present paper makes a pioneering attempt to estimate the macro impact of microfinance in Bangladesh. The expansion of microfinance constitutes an important dimension of financial development, which can affect the real economy through multiple channels. The present paper examines how microfinance has affected the gross domestic product (GDP) of Bangladesh by operating through a number of such channels – viz., capital accumulation, productivity improvement, and reallocation of capital and labor among different sectors. A static computable general equilibrium (CGE) model has been used in order to capture these transmission mechanisms. The study estimates that microfinance has added somewhere between 8.9 percent and 11.9 percent to the GDP of the country depending on the assumptions made about the working of the labour market. The contribution to rural GDP is even higher – between 12.6 and 16.6 percent. There is scope to refine these estimates further in future research by including additional transmission mechanisms and employing a dynamic version of the CGE model.
LanguageEnglish
Pages1-15
Number of pages16
JournalEconomic Modelling
Volume62
DOIs
Publication statusPublished - 1 Apr 2017

Fingerprint

Bangladesh
Microfinance
Computable general equilibrium
General equilibrium analysis
Gross domestic product
Computable general equilibrium model
Transmission mechanism
Reallocation
Labor
Capital accumulation
Financial development
Household
Productivity improvement
Multiple channels
Poverty
Well-being
Labour market
Pioneering

Keywords

  • Microfinance
  • CGE modelling
  • impact assessment
  • Bangladesh

Cite this

Osmani, Siddiqur R. ; Raihan, Selim ; Khalily, M. A. Baqui. / The Macro Impact of Microfinance in Bangladesh: A CGE Analysis. In: Economic Modelling. 2017 ; Vol. 62. pp. 1-15.
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The Macro Impact of Microfinance in Bangladesh: A CGE Analysis. / Osmani, Siddiqur R.; Raihan, Selim; Khalily, M. A. Baqui.

In: Economic Modelling, Vol. 62, 01.04.2017, p. 1-15.

Research output: Contribution to journalArticle

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