Microfinance has become a prominent method of alleviating poverty in Bangladesh, providing access to financial resources for those who need them. Much of the current literature regarding microfinance focuses on its effectiveness, and its impact on household income. This paper will examine how the gender of a borrower impacts the expenditure allocation of a household, closely following Saad, 2011. Bangladesh is a ‘purdah’ society, meaning women are expected to be submissive to their husbands. This cultural practice implies that men and women have different economic opportunities, such as being able to work in the market place, hold a job outside of the home, or invest in a business. Because of these differences, it is expected that men and women will use microloans and any resulting profit in different ways, one being expenditure allocation. As described by Saad, there are women oriented goods and men oriented goods. It is expected that there will be a larger share of women oriented goods as a portion of overall household expenditures if the primary borrower of that household is a woman rather than a man.
The data being analyzed was collected in 1991/92 by the World Bank in partnership with the Bangladesh Institute of Development Studies. 1,769 households from 87 villages were surveyed for household, individual, and village characteristics. Because not every village has a microfinance program, and these programs are often targeted towards women, there is potential self-selection bias. To account for this, an instrumental variable model is used, instrumenting for the average distance to lender and average interest rate of the village. A dummy variable is used for the gender of the primary borrower. With the current working model, the regression results are not statistically significant.
References
Saad, S. (2009, May). Essays on Microfinance: Financial and Social Impacts in Rural Bangladesh
