Micro Credit Intervention in Rural Poor Households and Its Effects on Household Vulnerability to Poverty
Abstract
142 words
Empirical studies have suggested the possibility of fuelling
vulnerability among households by microfinance programmes
through indebting the poor. Hulme and Mosley (1996) found
that there exists a tradeoff between changes in income and
vulnerability for poor households: Poverty-as measured by
income can be reduced by borrowing, but such debt can make
the poor more vulnerable because of the added risks associated
with borrowing. This study set out to establish if there exists
any direct relationship between microfinance and vulnerability
to poverty. We constructed a relative wealth index and a relative
poverty line, and observed households over a period of eighteen
months. We used a Probit model to estimate the probability
that a household becomes vulnerable in future. Both participants
in microfinance and non participants were included in the study.
Poorer people tended to take smaller loans with a more frequent
repayment period.
Subjects
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