Microfinancing in Bangladesh: Impact on households, consumption and welfare

This paper examines the welfare and distributional implications of microfinance institutions (MFIs) in Bangladesh in a general equilibrium framework. The major findings are that MFIs raise income and consumption levels of households, reduce income inequality and enhance welfare. This implies that microfinance is an effective development strategy and has important policy implications regarding poverty reduction, income distribution and achievement of millennium development goals (MDGs).