Medium and Long-Term Participation in Micronance: An Evaluation Using a Large Panel Dataset from Bangladesh

The objective of this paper is to estimate the impacts of long-and medium-term duration in micro…nance program participation, and also the short-, mediumand long-run impacts of micro…nance. It utilises a new, large and unique household-level panel dataset collected on 1997/98 treatment and contro households, spanning about 8 years. The data enables us to identify continuing participants in the program as well as newcomers and leavers. We employ di¤erent estimation strategies including triple-di¤erence and propensity score matching methods to control for selection bias. The impact estimates indicate that the bene…ts from micro…nance vary more than proportionately with the duration of participation in a program. Larger bene…ts are realized from longer-term participation, and that the bene…ts continue to accrue beyond the departure from the program. Accordingly, evidence from short-term program participation may not provide a reliable basis for assessing the e¢ cacy of micro…nance lending. JEL Classi…cation: Keywords: Micro…nance, Bangladesh, triple-di¤erence, propensity score matching, impact evaluation. I wish to thank Mark Harris, Dietrich Fausten, John Gibson, participants at the Econometric Society Australasian Meetings at Wellington, seminar participants at the University of Sydney, Monash University, and Bangladesh Institute of Development Studies for very useful comments and discussions. I am responsible for the contents of this paper.