Graduate Thesis

Here's the Abstract (aka summary) for my graduate thesis paper, which is titled Micro-Credit and Household Productivity: Evidence from Bangladesh.

This paper tests the effect of micro-credit on household productivity to determine whether micro-credit programs facilitate productivity gains through skills transfer and human capital formation in addition to the provision of credit. The data come from two rounds of household surveys in rural Bangladesh conducted by the World Bank and the Bangladesh Institute of Development Studies to analyze the impact of three micro-credit programs: the Rural Development-12 program of the Bangladesh Rural Development Board, the Bangladesh Rural Advancement Committee, and Grameen Bank. Controlling for macro events and household and village characteristics, I find that participating in a micro-credit program increases output per unit labor for household non-farm enterprises in a large and statistically significant way. These increases in productivity can provide the means for sustained improvements in standard of living and contribute to the economic growth of low-income countries.

And here's an excerpt from my Conclusion:

I use cumulative borrowing to proxy for micro-credit participation and find that a 1 percent increase in borrowing increases household productivity by 0.3 percent. This means that on average, a 100 percent increase in borrowing increases household productivity enough to generate an additional $45 in monthly revenue for the household’s non-farm enterprise. As the median revenue for these non-farm enterprises is $136 per month, a $45 increase is quite significant. After controlling for inputs such as capital and operating expenses, I find that nearly half of the gains in productivity are attributable to increases in total factor productivity. This suggests that the non-financial services offered by micro-credit programs, such as skills training and organizational development, as well as knowledge spillover resulting from the group-based nature, indeed serve to increase the productive capacity of borrowers.

I promise my next post will have some pictures. I'm not sure what they'll be of... but I know it's lame to have posts without any pictures!