Is Micro Too Small? Microcredit vs. SME Finance

Microcredit and small and medium enterprise (SME) finance are often pitched as alternative strategies to create employment opportunities in low‐income communities. So far, though, little is known about how employment patterns compare. We integrate evidence from three surveys in Bangladesh to show that, compared to microcredit customers, typical SME employees in Bangladesh are far more likely to be men, have more education and professional skills, and live in households that are notably less poor. SME jobs also require long work weeks, clashing with family responsibilities. The evidence from Bangladesh rejects the idea that SME finance more efficiently creates jobs for the population served by microcredit.

Website:

Pages:

31

Publisher:

NYU Wagner Research Paper

Author:

Jonathan Bauchet and Jonathan Morduch

Date:

November 7, 2011

Media Type:

Article

Category:

Microfinance