Poverty, Economic Vulnerability and Savings-Focused Microfinance

: A Study in North-West Bangladesh

Abstract

Microfinance is claimed to be an effective tool in fighting poverty and economic vulnerability. While credit-focused microfinance has been extensively researched and is often used synonymously with microfinance, the role of savings-focused microfinance has been less explored. This study aims to compare these two models of microfinance, focusing on their outreach, roles in removing credit and savings constraints, and reducing poverty in north-west Bangladesh, using the Association for Social Advancement (ASA), a credit-focused NGO-MFI, and the Rural Savings Bank (RSB), a savings-focused microfinance bank.
The empirical investigations focus on three questions: (i) How effective is savings-focused microfinance compared to credit-focused microfinance in reaching poor and vulnerable households? (ii) How effective is savings-focused microfinance compared to credit-focused microfinance in removing credit and savings constraints? and (iii) How effective is savings-focused microfinance in reducing poverty? This study employs a mixed-methods design and uses primary data collected through household surveys and qualitative interviews. For the first question, it compares the ASA and RSB households across eight parameters. For the second question, it analyses the credit and savings profiles of ASA and RSB households and incorporates the perspectives of two MFI officials. For the third question, it uses the consensual approach to measure the change in poverty level of RSB households over time and a quantile regression model to assess the contribution of RSB’s savings-focused microfinance in reducing poverty.
The conclusions are as follows: (i) savings-focused microfinance is relatively more effective than credit-focused microfinance in reaching poor and vulnerable households, (ii) while there is no difference between the two models in removing credit constraints, savings-focused microfinance is slightly more effective in removing savings constraints, and (iii) although the analysis does not provide conclusive proof that savings-focused microfinance reduces poverty, it helps improve economic security of the served households.

Date of Award	30 Sept 2025
Original language	English
Awarding Institution	University of Bristol
Sponsors	Prime Minister Fellowship
Supervisor	David Gordon (Supervisor), Samuel F Kirwan (Supervisor) & Demi Patsios (Supervisor)