Papers by Institute for Inclusive Finance and Development (InM)
Non-Borrowing Effects of Microfinance Participation: Evidence Using Long Panel Survey Data in Bangladesh, 2015
This working paper has been prepared as part of a project which is still work-in-progress. As suc... more This working paper has been prepared as part of a project which is still work-in-progress. As such, NO part of the paper should be quoted or extracted without prior permission of the authors and InM. However, comments and criticisms are welcome. The views expressed in this paper are entirely of the authors and do not necessarily reflect the views of InM, DFID or any other affiliated organizations. This publication has been supported under the PROSPER (Promoting Financial Services to Poverty Reduction) Program funded by UKaid, DFID. As per the InM policy, all the working papers are peer reviewed.
InM, 2016
Climate change results recurrent natural disasters which cause an enormous loss in the
household ... more Climate change results recurrent natural disasters which cause an enormous loss in the
household as well as in the community levels. This study is designed to meet two major
objectives. Firstly, assessment of the household level loss and damage incurred from super
cyclones Sidr and Aila and tropical storm Mahasen in three districts namely Khulna,
Patuakhali and Satkhira. Secondly, coping strategies adopted by the affected households in
the post-cyclone situation and the role of microfinance in the process of adaptation. The
itinerary of the catastrophic cyclone Sidr and storm Mahsen includes Patuakhali district,
whereas super cyclone Aila has gone through the districts Khulna and Satkhira. As expected,
highest proportions of households of these areas were affected by the respective cyclones
and storm and their total amount of loss and damage was higher compared to others. The
average size of loss and damage studied in terms of loss of assets, from direct income,
reconstruction expenses or increased expenditure are also evident to be larger by the itinerary
of the disasters. However, the amount of loss and damage in all forms and average size per
households resulted from Aila was substantially higher than that resulted from Sidr and
Mahasen.
In focusing the second major objective, the adopted coping strategies are broadly classified as
current income or savings, sale of assets, informal loan and government support. It is evident
from the bivariate analysis that more of the program households choose current income or
savings for adaptation purpose than their counterpart. Conversely, the percentage of
households taken loan from informal market among control households was higher than that
of program group households. In most of the cases higher percentage of program households
received government support than control households. The variation in the percentage of
households adopted different coping strategies over household characteristics is observed.
Endogenous switching regression models with full sample and samples with counterfactual
evaluate that the expected amount of coping from current income or savings was significantly
higher for program group households than their counterpart in three cyclone cases and on the
contrary, informal loan was significantly lower than that of control group households in the
cases of Sidr and Aila, but reverse in case of Mahsen. The model of government support is
only convergent
This paper evaluates the efficiency of Programmed Initiatives for Monga Eradication (PRIME) branc... more This paper evaluates the efficiency of Programmed Initiatives for Monga Eradication (PRIME) branches by using non-parametric Data Envelopment Analysis (DEA) in five districts of North-West region of Bangladesh. The production function approach is used for the assessment of efficiency scores of 149 branches under both constant and variable returns to scale. The results of the study revealed that there were considerable inefficiencies among PRIME branches for the year of 2010 to 2012. In addition, a second stage Tobit regression shows that the variation is also related to branch-specific attributes such as branch age, PRIME to total member ratio, borrower per staff, and location. Since PRIME is an ultra-poor program, it is suggested that achieving higher efficiency might take longer time as old branches were more efficient than new ones. It is, therefore, also suggested that by employing more skilled staff, borrower per staff as well as branches efficiency will be increased in the study areas. However, Kurigram was less scale efficient and Nilphamari was more technically efficient in contrast to Rangpur district. This result implies that for expanding PRIME branches in future, selection of appropriate location will help to achieve higher efficiency.
This study was conducted to examine the impact of programmed initiative on MFI sustainability and... more This study was conducted to examine the impact of programmed initiative on MFI sustainability and to analyze the tradeoff between the depth of outreach and sustainability. Based on panel data of 223 MFI branches in Bangladesh over a period of five years, this study documents that extreme poverty is not a deterrent to MFI sustainability. That means, MFIs reaching the extreme poor can remain sustainable and in essence, they do not have to make a tradeoff with the depth of outreach. This has crucial implications for MFI operations and financing. This study also documents that MFIs undertaking programmed initiative to alleviate poverty can become
sustainable if they attain the critical factors. Further to this, this study provides evidence that direct subsidy creates disincentive for MFIs to become sustainable.
This paper seeks guidance for future directions of a social protection system in rural Bangladesh... more This paper seeks guidance for future directions of a social protection system in rural Bangladesh on the basis of lessons learnt on the ground. For this purpose, an attempt was made to glean insights about the strengths and weaknesses of the existing social protection system by utilising a large-scale poverty survey that is representative of rural Bangladesh. Careful empirical investigation shows that despite the fact that the existing system is reasonably progressive in the incidence of benefits, the system has failed to achieve the major objectives of serving the interest of disadvantaged groups by shoring up their living standard, by enabling them to cope better with periodic crises and by preventing them from falling down the asset ladder. The proximate reasons for this failure are two-fold. First, the aggregate amount of benefits is abysmally small in relation to the need; and secondly, even the small amount that is available is distributed heavily in favour of better-off households. These findings hold important lessons for the future. In the light of lessons learnt, the paper argues that as part of necessary rationalization of the existing system, serious consideration should be given to taking out education-based programmes from the umbrella of social protection and housed elsewhere. Among the existing programme categories, special emphasis ought to be given to employment-based interventions. They are relatively more favourable for the poor and there exists enormous potential for expanding them manifold. Finally, the paper draws attention to a serious lacuna that exists in the existing system insofar as a comprehensive system of health insurance does not yet exist. Health-related shock is the most pervasive type of shock in rural Bangladesh and is the single most important reason why many non-poor households slide into poverty over time and poor households fall deeper into poverty. A social protection system worthy of its name cannot ignore the need for setting up an effective mechanism for protecting vulnerable households from the pernicious effect of this most pervasive of shocks.
This paper analyzes the nexus among risk, deprivation and vulnerability that confront the rural p... more This paper analyzes the nexus among risk, deprivation and vulnerability that confront the rural poor in their daily life. It examines the nature of shocks, the consequent economic burden, and the coping mechanisms. It explains how shocks affect deprivation and vulnerability of households to poverty. The prominent shocks are health, death, crop, property and livestock, typically of the idiosyncratic in nature, except possibly that of crop. However, the effects of such shocks are likely to be more adverse for households that have difficulty maintaining their consumption level above the poverty threshold. Capability deprivation is measured here by the food adequacy level of the household during the preceding 12 months. We use an ordered-probit model to estimate the effect of various shocks on food deprivation. The results show that the poor significantly depend on investable surplus and liquidation of asset and property (i.e., self-insurance) in order to overcome the burden of shocks and the burden of shocks significantly affects the food adequacy level. In light of the evidence on the possible impact of Grameen Kalyan health intervention, it is argued that well-designed microinsurance products may be more effective and less costly than the usual mix of self-insurance, ad-hoc relief and rehabilitation measures to cope with shocks so that risks of future poverty, namely vulnerability, can be minimized.
Using the sociological construct of individual modernity, this study explores the impact of micro... more Using the sociological construct of individual modernity, this study explores the impact of microcredit on the attitudes, behaviors, values and aspirations of women in rural and peri-urban Bangladesh. Viewing future-orientation, individualism, equity, tolerance of diversity, rationality, as characteristics of modernity, this study examines trends towards individual modernity. This study combines both qualitative and quantitative methods and largely premised on the assumption of qualitative sociology where the focus of the study is an understanding of the phenomena and not establishing a cause-effect relationship between variables. The study used a household survey of pre-selected samples mostly drawn from rural and some selected periurban households in Bangladesh. Rural Bangladesh has come under the impact of various governmental as well as non-governmental development-intervention programs of which microfinance feature prominently. Hence, it is difficult to isolate the impact of microfinance in a precise fashion among the competing interventionist programs of governmental and nongovernmental organizations on changing attitudes and behaviors of the pondents. Yet, the study shows that the borrowers of microcredit have a slightly higher educational aspiration for their daughters’ education. In terms of beliefs in superstitions – another indicator of modernity - they are not indistinguishable from the non-borrowers. The respondents, were future-oriented, had high aspirations for their children’s’ education - both males and females - and were aware of the key developmental issues. They had opinion about intrusion of new technology in their communities and they articulated their opinions on both the positive and negative impact of such technologies as satellite television (so-called dish television) and mobile phones. A large number of respondents were not fatalists and believed that it was their actions and not fate that played the most important role in determining their future. The responses showed some underlying tendency towards rationalization of their world. Modern ideas seem to have affected the entire community. This study concludes that microcredit is one of the contributing factors towards creating a culture of modernity in both rural and peri-urban areas in Bangladesh.
This paper analyzes inequity in health care use in rural Bangladesh using data from a survey cond... more This paper analyzes inequity in health care use in rural Bangladesh using data from a survey conducted by Microinsurance Research Unit (MRU) of the Institute of Microfinance (InM) of 4,010 households drawn from 120 villages. The study focuses on formal health care use over the 12 months preceding the survey. We use both the ‘need standardized’ approach and ‘decomposition analysis’ for measuring inequity. The paper finds that the use of formal health care is incredibly low (40%); about two-thirds (65%) of which is private health care and only one-fourth utilizes public sector facilities. Inequity in formal health care use favors the better-off although the level of inequity is modest. Prevailing inequity resides mainly in the utilization of private health care while NCDs contribute significantly to this inequity. Thus, the main public health concern in rural areas of Bangladesh is the low utilization of formal health care (especially public health care), not inequity. From a policy perspective therefore, voluntary health insurance is not an answer so far as chronic NCDs are concerned; social insurance is not quite feasible either due to the large informal economy. Hope therefore lies in the public provision of health care although the latter is plagued by various supply side constraints including meager budgetary resources, daunting governance issues and hence the need for reforms to enhance efficiency.
This paper examines disease-specific impoverishment impact of out-of-pocket (OOP) payments using ... more This paper examines disease-specific impoverishment impact of out-of-pocket (OOP) payments using a dataset of 3,941 households obtained from a survey conducted in 120 villages of seven districts in Bangladesh. We have estimated the poverty impact of OOP payments by comparing the difference between the average level of headcount poverty and poverty gap with and without health care payments. We find that OOP payments annually push 3.4 percent households into poverty in rural Bangladesh. The corresponding figures for those who had NCDs (non-communicable diseases), chronic illness, hospitalization and catastrophic illness respectively were 4.61, 4.65, 14.53 and 17.33 percent. Note that NCDs are the major part of the latter two situations (about 88% and 85% respectively). Looking into individual categories of NCDs we find that headcount impoverishment impact was immense for cholecystectomy, mental disorder, kidney disease, cancer and appendectomy. The impact on the intensity of impoverishment is the largest among the hospitalized patients and more individually among cancer patients. Hence, NCDs particularly chronic NCDs and those requiring immediate surgical procedures should be given more priority for policy framing. In addition to adopting some ex-ante measures (e.g. raising awareness regarding the risk factors causing NCDs), the paper argues for reforms to enhance efficiency in the public health care facilities and increasing quality of public health care.
Microcredit programs in Bangladesh have experienced spectacular growth in recent years, with a gr... more Microcredit programs in Bangladesh have experienced spectacular growth in recent years, with a growing number of borrowers availing credit from multiple microcredit agencies. There is a growing concern that if there are not sufficient returns to borrowing from microfinance institutions (MFIs), some borrowers might be taking loans that they will not be able to repay. A household may be considered over-indebted, for example, if its debt liability exceeds 40 percent of its income or assets. Using a long panel household survey data from Bangladesh, the paper finds that some 26 percent of microcredit borrowers are over-indebted on this measure versus 22 percent of non-microcredit borrowers. An econometric analysis that controls for both observed and unobserved variations at the household and community level suggests that MFI competition raises indebtedness. But when household participation is taken into account the community-level program density, a measure for MFI competition, it does not seem to have an independent adverse effect. However, although repeated micro-borrowing affects short-term liability adversely, it affects the long-term debt-asset ratio favorably. That is, repeated borrowing helps increase assets more than debt over time. As borrowing is often used to protect members against exposure to shock such as flood even at the cost of being over-indebted, the MFIs may offer cost-effective micro-insurance schemes to help them mitigate the adverse effects of shocks.
Using two surveys from Bangladesh, this paper provides evidence on the effects of microfinance co... more Using two surveys from Bangladesh, this paper provides evidence on the effects of microfinance competition on village moneylender interest rates and households’ dependence on informal credit. The views among practitioners diverge sharply: proponents claim that MFI competition reduces both the moneylender interest rate and households’ reliance on informal credit, while the critics argue the opposite. Taking advantage of recent econometric approaches that address selection on unobservables without imposing standard exclusion restrictions, we find that the MFI competition does not reduce moneylender interest rates, thus partially repudiating the proponents. The effects are heterogeneous; there is no perceptible effect at low levels of MFI coverage, but when MFI coverage is high enough, the moneylender interest rate increases significantly. In contrast, households’ dependence on informal credit tends to go down after becoming MFI member, which contradicts part of the critic’s argument. The evidence is consistent with a model where MFIs drawaway better borrowers from the moneylender, and fixed costs are important in informal lending.
This paper addresses whether microcredit participants in Bangladesh are trapped in poverty and de... more This paper addresses whether microcredit participants in Bangladesh are trapped in poverty and debt, as many critics have argued in recent years. Analysis of data from a long panel survey over a 20-year period confirms this is not the case, although numerous participants have been with microcredit programs for many years. The results of the analysis suggest that participants derive a variety of benefits from microcredit: It helps them to earn income and consume more, accumulate assets, invest in children’s schooling, and be lifted out of poverty. This is not to say that non-participants have failed to progress over the same period. Both participants and non-participants have gained as the economy has grown; however, the rates of poverty reduction have been higher for participants. Testing the net effect of microcredit programs requires applying an econometric method that controls for why some households participated and others did not, conditional on their initial characteristics. In addition, the method must control for time-varying, unobserved heterogeneity that affects everyone over time, albeit in possibly different ways. The paper’s econometric estimates show significant welfare gains resulting from microcredit participation, especially for women. They also show that the accrued benefits of borrowing outweigh accumulated debt. As a result, households’ net worth has increased, and both poverty and the debt-asset ratio have declined.
This paper reviews the evidence that has accumulated so far on the impact of microcredit on pover... more This paper reviews the evidence that has accumulated so far on the impact of microcredit on poverty in rural Bangladesh. The early studies on the impact of microcredit almost invariably found that microcredit had made a positive contribution not only in reducing poverty but also in a host of other economic and social dimensions. These studies soon came to be questioned, however, on the grounds of econometric methodology. It was argued, in particular, that various kinds of ‘selection bias’ vitiate their findings and lend an ‘upward bias’ to their estimates of the impact of microcredit. The possibility of ‘upward bias’ was especially damaging since it meant that the claim of a positive contribution of microcredit could no longer be credibly made. Later studies used sophisticated techniques to get rid of this bias; but while the earliest of this second generation studies continued to find positive contribution of microcredit, others soon began to question their findings, resulting in a prolonged and sometimes obscure debate on econometric methodology. Some of the critics even claimed to find no evidence for the impact of microcredit at all, even by using the same datasets as used by those who had claimed to find a positive impact. The review presented in this paper comes to the conclusion that the original finding about the positive contribution of microcredit survives this debate even though there might be some doubt about the precise magnitude of the impact. More importantly, as most of these debates centred around studies based on cross-section data, they have become mainly irrelevant with the emergence of third generation studies based on panel and quasi-panel data which are able to deal with the problem of selection bias much more satisfactorily. These studies confirm that microcredit has indeed made a positive contribution towards reducing poverty in rural Bangladesh. According to a conservative estimate, microcredit has helped reduce overall rural poverty by about 5 per cent and extreme poverty by about 10 per cent. Considering the borrower households alone, microcredit has helped roughly 1 in 10 borrowers to come out of poverty and 1 in 5 borrowers to come out of extreme poverty. Another way of looking at these numbers is that with the help of microcredit roughly about 2 per cent of borrowers have been able to climb out of poverty every year on the average. If these figures look less than spectacular, there is no reason to expect otherwise because, firstly, microcredit is just one intervention among many that have a bearing on poverty and, secondly, considering that many of the borrowers were at the bottom of the rung to begin with and that loan amounts are but a very small fraction of even poor household’s total income one could not possibly have expected any significantly larger number coming out of poverty. There are good reasons, however, why these numbers should not be belittled either. In the first place, there is hardly any other intervention that has been able to bring 1 out of 10 beneficiaries out of poverty anywhere in the world. Secondly, the benefit of microcredit goes well beyond the number of people it manages to pull above the poverty line. The discourse on microcredit should move on. Instead of taking rigid positions on the efficacy of microcredit in general, the protagonists should focus attention on the details of how microcredit can be made more useful for the poor.
Bangladesh lagged in microfinance regulation until 2006 when it established Microcredit Regulator... more Bangladesh lagged in microfinance regulation until 2006 when it established Microcredit Regulatory Authority (MRA). So far, MRA has granted license to around 650 Microfinance Institutions (MFIs); and has been supervising them with prudential and non-prudential regulations. We assessed the impact of regulation on cost efficiency using from pre-regulation and post-regulation data of 182 MFIs. Panel data analyses robustly show that regulation improves cost efficiency; directly through changing behavior of the MFIs, and indirectly through increasing staff productivity and portfolio size. We found partners of PKSF—the wholesale lending agency in Bangladesh—and unsubsidized MFIs are more efficient than others.
This paper, using several data sets, investigates whether microcredit programmes, which have been... more This paper, using several data sets, investigates whether microcredit programmes, which have been operating in rural Bangladesh for over 20 years, have any long-term effects in improving household income and expenditure and lowering poverty. Both descriptive and econometric analyses show that microcredit programmes helped participants earn higher income, consume more, and thereby lifted many of them out of poverty. Findings also suggest that while participation matters, those who have been with the programmes continuously for the last 20 years do even better. The paper concludes that poverty reduction, in particular the reduction of extreme poverty, due to microcredit intervention can be as high as 9 per cent of the total poverty reduction over the last decade in Bangladesh.
In less-developed economies such as Bangladesh where the farm sector is the major source of emplo... more In less-developed economies such as Bangladesh where the farm sector is the major source of employment and income, the rural non-farm sector (RNF) often as an additional source of income increasingly plays an important role in fostering the development of the rural economy, and microenterprise activities constitute a significant share of this sector. However, the key to participation in such activities requires investment and access to adequate funds. This paper investigates the role of access to finance in promoting efficiency and growth of microenterprise activities. Our findings suggest that the households engaged in microenterprise activities besides farm and other nonfarm activities are much better off (in terms of income, expenditure and poverty) than those who do not engage in such activities. However, fewer than 10 per cent of the enterprises have access to institutional finance (formal banks or microcredit) although the rate of return on microenterprise investments is more than sufficient (36 per cent per year) to repay institutional loans. Our findings suggest that credit constraints may reduce the enterprise profit margin by as much as 13.6 per cent per year. As the returns to microenterprise investment are found high, microfinance institutions (MFIs) can play a bigger role in supporting microenterprise growth in Bangladesh.
Microcredit is assumed to be likely to contribute both directly and indirectly to agricultural fa... more Microcredit is assumed to be likely to contribute both directly and indirectly to agricultural farm performance, farm output, poverty reduction and food security in Bangladesh. In this research, we study the impact of microcredit on farm performance, output and food security using farm level survey data from Rangpur, Dinajpur, Bogra and Rajsahahi districts of northern Bangladesh. The survey is conducted on 682 farms of which 450 are microcredit receivers and the rest 232 are microcredit non-receivers. We apply the Cobb-Douglas stochastic frontier and data envelopment analysis (DEA) along with inefficiency effects model and propensity score matching (PSM) techniques to assess the effects of microcredit on farm performance, output and food security.
This paper provides an analysis of the utilisation of formal health care and out-ofpocket (OOP) p... more This paper provides an analysis of the utilisation of formal health care and out-ofpocket (OOP) payments in rural areas of Bangladesh. The broader focus of the investigation is to gauge how far Bangladesh has to traverse to achieve universal health coverage (UHC). We used the data from the baseline survey (conducted in diversifi ed geographical locations on about 4,000 households) of a longitudinal research project (entitled Microinsurance, Poverty and Vulnerability) of the Institute of Microfi nance (InM). The study fi nds that over 12-month period, only 40 per cent of the 6,352 sick individuals utilised formal health care. The poor and the children are the most deprived section in the utilisation. Out-of-pocket expenses per affected household during 12 months preceding the survey was BDT 4,686, which accounted for about 6 per cent of the total household expenditure. Drug, the single largest component of the OOP category, accounts for about 60 per cent of the direct OOP expenditure. The incidence of catastrophic expenditure was 15 per cent at the 10-per cent threshold level. In about 33 and 41 per cent of the cases, households needed to borrow or deplete assets for coping with inpatient care and catastrophic illnesses, respectively. Poor effective access to formal healthcare and high OOP expenditure indicate that Bangladesh has major challenges to overcome in achieving the universal health coverage. Membership in Grameen Kalyan micro health insurance scheme, essentially a discounted basic care package, has a signifi cant association with the likelihood of using formal health care, though access to microcredit appear not to relieve households of the need to search for additional funds to cope with catastrophic events. An obvious suggestion is to introduce a risk-sharing mechanism (e.g., micro health insurance) to pool funds for the provision of health care in rural areas. Awareness building on the value of professional medical advice and measures targeted at effective regulation of the prices of essential drugs and restricting the sales of over-the-counter drugs are also put forward as elements of a sound public health policy framework.
This paper investigates the link between asset accumulation and poverty dynamics in rural Banglad... more This paper investigates the link between asset accumulation and poverty dynamics in rural Bangladesh by using a recently conducted large-scale household survey and applying a conceptual framework that adapts the well-known entitlement approach to the dynamic context. The study found evidence of a systematic relationship between asset accumulation in the past and poverty status at present. Those who have been able to accumulate more and move up the asset ladder are found to have a higher likelihood of belonging to the better off groups today. In trying to identify the factors that shaped the dynamics of asset transition itself, the paper examined a number of factors, including microcredit, remittances, schooling, gender, and the scope for employment opportunities. Access to microcredit was found to enhance the probability of moving up the asset ladder and to reduce the probability of falling. While this is true for both poor and non-poor households, the effect is much stronger for the poor. Most of the poor borrowers started their journey in life with fewer assets compared to poor non-borrowers. But over time they have been able to accumulate assets at a faster pace in comparison with poor non-borrowers, thereby narrowing the original gap in endowments, and access to microcredit is found to have made a positive contribution in this regard. Furthermore, faster pace of asset accumulation has not remained confined only to those borrowers who have utilised the loan productively; it has also extended to those who have used the loans mainly for consumption purposes. For the latter group, access to microcredit has helped by reducing the need for asset depletion at times of crises. The study has also found that microcredit's contribution to asset accumulation has translated itself into contribution to poverty reduction. Access to microcredit reduces the probability of being poor by 2.5 per cent. If only the borrowers who have used credit for productive purposes are considered, then the probability of being poor falls even more -by 6.8 per cent. The study finally made an attempt to answer the question: how much of the observed poverty reduction in rural Bangladesh can be attributed to microcredit? The dynamic adaptation of the entitlement approach was utilised for the purpose of answering this question. A conservative estimate was about 5 per cent -in the sense that if microcredit had not existed rural poverty would have been almost 5 per cent higher than what it was in 2010. The contribution to the reduction of extreme poverty was found to be considerably higher -about 9 per cent.
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Papers by Institute for Inclusive Finance and Development (InM)
household as well as in the community levels. This study is designed to meet two major
objectives. Firstly, assessment of the household level loss and damage incurred from super
cyclones Sidr and Aila and tropical storm Mahasen in three districts namely Khulna,
Patuakhali and Satkhira. Secondly, coping strategies adopted by the affected households in
the post-cyclone situation and the role of microfinance in the process of adaptation. The
itinerary of the catastrophic cyclone Sidr and storm Mahsen includes Patuakhali district,
whereas super cyclone Aila has gone through the districts Khulna and Satkhira. As expected,
highest proportions of households of these areas were affected by the respective cyclones
and storm and their total amount of loss and damage was higher compared to others. The
average size of loss and damage studied in terms of loss of assets, from direct income,
reconstruction expenses or increased expenditure are also evident to be larger by the itinerary
of the disasters. However, the amount of loss and damage in all forms and average size per
households resulted from Aila was substantially higher than that resulted from Sidr and
Mahasen.
In focusing the second major objective, the adopted coping strategies are broadly classified as
current income or savings, sale of assets, informal loan and government support. It is evident
from the bivariate analysis that more of the program households choose current income or
savings for adaptation purpose than their counterpart. Conversely, the percentage of
households taken loan from informal market among control households was higher than that
of program group households. In most of the cases higher percentage of program households
received government support than control households. The variation in the percentage of
households adopted different coping strategies over household characteristics is observed.
Endogenous switching regression models with full sample and samples with counterfactual
evaluate that the expected amount of coping from current income or savings was significantly
higher for program group households than their counterpart in three cyclone cases and on the
contrary, informal loan was significantly lower than that of control group households in the
cases of Sidr and Aila, but reverse in case of Mahsen. The model of government support is
only convergent
sustainable if they attain the critical factors. Further to this, this study provides evidence that direct subsidy creates disincentive for MFIs to become sustainable.
household as well as in the community levels. This study is designed to meet two major
objectives. Firstly, assessment of the household level loss and damage incurred from super
cyclones Sidr and Aila and tropical storm Mahasen in three districts namely Khulna,
Patuakhali and Satkhira. Secondly, coping strategies adopted by the affected households in
the post-cyclone situation and the role of microfinance in the process of adaptation. The
itinerary of the catastrophic cyclone Sidr and storm Mahsen includes Patuakhali district,
whereas super cyclone Aila has gone through the districts Khulna and Satkhira. As expected,
highest proportions of households of these areas were affected by the respective cyclones
and storm and their total amount of loss and damage was higher compared to others. The
average size of loss and damage studied in terms of loss of assets, from direct income,
reconstruction expenses or increased expenditure are also evident to be larger by the itinerary
of the disasters. However, the amount of loss and damage in all forms and average size per
households resulted from Aila was substantially higher than that resulted from Sidr and
Mahasen.
In focusing the second major objective, the adopted coping strategies are broadly classified as
current income or savings, sale of assets, informal loan and government support. It is evident
from the bivariate analysis that more of the program households choose current income or
savings for adaptation purpose than their counterpart. Conversely, the percentage of
households taken loan from informal market among control households was higher than that
of program group households. In most of the cases higher percentage of program households
received government support than control households. The variation in the percentage of
households adopted different coping strategies over household characteristics is observed.
Endogenous switching regression models with full sample and samples with counterfactual
evaluate that the expected amount of coping from current income or savings was significantly
higher for program group households than their counterpart in three cyclone cases and on the
contrary, informal loan was significantly lower than that of control group households in the
cases of Sidr and Aila, but reverse in case of Mahsen. The model of government support is
only convergent
sustainable if they attain the critical factors. Further to this, this study provides evidence that direct subsidy creates disincentive for MFIs to become sustainable.