Demystifying nonparticipation in microcredit: A population-based analysis

Given the current popularity of microcredit schemes as a means of poverty a lleviation, their accessibility to the poorest is of obvious concern. This paper examines a targeted microcredit program in Bangladesh to assess its c overage among the poor, and to identify program- and client-related barrier s impeding participation. A population survey of over 24,000 households rev eals that although three-quarters are eligible for microcredit, less than o ne-quarter participate. Rates of participation in microcredit are higher am ong poorer households. Multivariate analysis identifies lack of female educ ation, small household size and landlessness as risk factors for nonpartici pation, based on a 7% random sample of this population. The implications of these findings for poverty alleviation policies and programs are discussed . (C) 1999 Elsevier Science Ltd. All rights reserved.