Rapid Growth of Microcredit and Its Drift in Depth of Outreach to the Poorest of the Poor in Rural Bangladesh

Ruhul Amin, Johns Hopkins University
Linnea Zimmerman, Johns Hopkins Bloomberg School of Public Health

Some posit that as microfinance institutions increasingly pursue market-driven approaches to attain growth and self-sustainability, they experience drift in depth of outreach to the poorest of the poor. . During this process, microfinance institutions might find it optimal to reach out to wealthier clients while excluding poorer clients. Using cross-sectional household survey data at two points in time–2006 and 2009–from 128 villages of rural Bangladesh and applying wealth quintile at the household level as proxy for the depth of outreach, this article assesses the extent of this drift among microfinance institutions. Although the majority of the households reached with microcredit were above the poorest wealth quintile, the poorest were not lagging behind those of other higher wealth quintiles in terms of their participation rate in microcredit.