The Economic and Social Impacts of Microfinance : a Case Study of Grameen Bank

Abstract

Grameen Bank became a well-known microfinance institution because of its unique loan program for beggars and group lending. This paper will introduce Grameen Bank and how its credit delivery system develops accumulation of capital, especially social capital, by comparing it to another microfinance institution, Bangladesh Rural Advancement Committee (BRAC), through previous findings. Then, it will present the impact of microfinance on total household expenditure by developing a multivariate regression model using the Ordinary Least Square (OLS). Microfinance does positively influence total expenditure. Furthermore, this relationship implies that microfinance also yields positive effects accumulation of the capital.