Impact and Sustainability of Micro Credit in Rural Bangladesh – A Study on Grameen Bank and BRAC

Abstract

This study tried to assess the impact and sustainability of microcredit in rural Bangladesh. Microcredit is an important tool in the fight against poverty. In most developing nations, microcredit's impact is visible, and has an effect on the living standard of impoverished people. In this study, we tried to assess the effect of punishment and group size on group contribution. How do these behave in microcredit group-based lending? The data was collected via an online experiment. In which the participants joined in a "public goods game’ at veconlab. Our assumptions are punishment increase the level of contribution and small group affect positively the group contribution.

The study findings show that when the punishment increases, the contribution level is negatively affected. Furthermore, when the group size grows big, the contribution level increases. The results show a contradictory result of the assumptions. It might be the reason most of the participants didn’t understand the game process. It is the limitation of this study, and for further research the researchers should consider this aspect. This study will show a way to the future researcher by considering different aspects.