IMPACT OF MICROCREDIT IN ENHANCING FOOD SECURITY OF RURAL HOUSEHOLDS IN BANGLADESH

Abstract

The main objective of this study was to assess the impact of microcredit on the food security status of rural households in Bangladesh. Primary data was collected from Comilla and Chandpur districts of Bangladesh due to availability of microcredit borrowers. Data were collected purposively from 200 respondents through face-to-face interviews during January to June, 2022. Descriptive and econometric models were used to analyzed the data. Probit regression model, Food Consumption Score (FCS) and Propensity Score Matching (PSM) technique were used to obtain the objectives of the study. Probit regression model was used to assess the factors influencing access to microcredit. FCS method was used to assess the food security status of microcredit borrowers and non-borrowers and PSM was used to evaluate the impact of microcredit in enhancing food security of rural households. The findings indicated that gender, age, agricultural land, family, household size, non-farm income source of household and training influence access to microcredit positively, in opposite education, occupation, earning member and annual income influenced access to microcredit negatively whereas gender, age, land, family, household size, non-farm income, annual income and training were significant at 5% level of significance and education, occupation, earning member, training were significant at 1% level of significance. The results also revealed that there is a significant difference of FCS with 1% level of significance between microcredit borrowers and non-borrowers and FCS is higher for nonborrowers compared to borrowers. The PSM result revealed that microcredit program

has reduced the food security status of

the borrowers by 17.564 and 6.04 unit based on

Nearest

Neighbor (NN) and Radius matching method. Inadequate credit availability and inefficient credit utilization could be the cause. The study suggests that microcredit program should be design to promote sustainable livelihood of rural households and regular monitoring and evaluation are essential to assess the impact on food security. In addition, it is recommended that microcredit intervention with social support programs can have a holistic impact on improving food security and well-being of rural households.