"Effect of Microcredit of Grameen Bank on Well-Being of Borrower Households: a Study in the Rural Area at Adamdighi Upazila in Bogra District of Bangladesh"

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SOCIAL SCIENCE AND HUMANITIES

Manuscript info: Received December 12, 2018., Accepted December 17, 2018., Published January 20, 2019.

"EFFECT OF MICROCREDIT OF GRAMEEN BANK ON WELL-BEING OF BORROWER HOUSEHOLDS: A STUDY IN THE RURAL AREA AT ADAMDIGHI UPAZILA IN BOGRA DISTRICT OF BANGLADESH"

Md. Abu Shamim M. Phil. Fellow, Department of Economics University of Rajshahi, Rajshahi, Bangladesh Email: [email protected]

http://dx.doi.org/10.26739/2521-3253-2019-1-2

Abstract: This study is to examine the effect of microcredit of Grameen bank on well- being of borrower households in rural area of Bangladesh. Microcredit service of Grameen Bank covers about all villages of Bangladesh. Borrower households took microcredit of Grameen Bank and it employed in productive sectors, agriculture and non-agriculture sectors. Borrowers also employed themselves in income generating activities beside household activities after taking microcredit from Grameen Bank. The sample size of the study was only 188. Well-being index, Chi-square test, Paired- t Test and OLS regression model were used for primary data analysis of the study. It is found that the mean value of well- being index of borrower households before joining in Grameen Bank was 0.35 which increased to 0.57 at present. Chi-square test shows an association between microcredit of Grameen Bank and the value of assets with well-being of borrower households is statistically significant. The results of OLS model are found that the coefficients of average monthly income, microcredit of GB, accumulative savings, number of income earners, number of female income earners and social network are significant at different level without average level of education and medical access, respectively. It is found that well-being of borrower households of GB is increased by 0.099 percent and 0. 053 percent if both microcredit of Grameen bank and accumulative savings of borrower households will be increased by 1 percent. It indicates that microcredit of Grameen Bank and accumulative saving of borrower households was positive and significant effect on increasing well-being of borrower households in study area. Key Words: Grameen Bank, Microcredit and Well-Being of Borrower Households

Recommended citation: Md. Abu Shamim. "EFFECT OF MICROCREDIT OF GRAMEEN BANK ON WELL-BEING OF BORROWER HOUSEHOLDS: A STUDY IN THE RURAL AREA AT ADAMDIGHI UPAZILA IN BOGRA DISTRICT OF BANGLADESH". 1 European Journal of Research P. 14-32 (2019).

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1.1 Introduction Household well-being in rural area of Bangladesh is not well in the study area but also overall country. Most of borrower households cannot provide basic need for daily life. The well-being of borrower households of GB is not well but they lead low quality of life. The level of income, expenditure, savings, value of assets of household and household condition are low in the rural area than the urban area of Bangladesh. Because borrower households of GB employed on agricultural activities and most of borrower households of GB cultivate land as leaseholder and marginal farmer who have below 50 decimals. This land is not enough for driven borrower households. Most of borrowers are illiterate and can know sign only his or her name but they have no institutional certificate. Unemployment problem is major problem in the rural area of Bangladesh. If uneducated and unemployed poor people are provided proper training and technical knowledge, they will be made a human asset of the country. Capital is need for both agricultural activity and non-agricultural activity. But poor people do not get loan from conventional bank because they are failure to provide collateral. On the other hand, poor people get loan from informal sector but the rate of interest is high at informal source compared to formal and semi-formal sources. However, GOs and NGO-MFIs have been working together for improving well-being among poor people in the rural areas of Bangladesh. But, government service or loan is not enough and lengthy loan procedure. NGO-MFIs were working for improving well-being among people in the rural areas overall Bangladesh beside government organizations. Microcredit is provided to these poor households, who want to engage themselves in non-farm activities and farm activities. In addition, most of borrowers of GB are housewife. If those poor women are engaged in economic activities beside household work, these household's income, savings, expenditure (food and non-food expenditure), housing condition of the borrower households of GB will be increased for more income generating activities. In Bogra zone (Bogra district) of Bangladesh, the disbursement of loan Grameen (GB) Bank was Tk.13132.23 (million) 2008, which increased to Tk.48176.13 million in 2016. The borrower numbers of GB in the zone was 227839 borrowers in 2008 which increased to 308136 borrowers in 2016. Day by day, number of borrowers, savings of borrowers in GB, number of educational loanees, amount of education loan, number of struggle (beggars) member and amount of struggle loan were increased more in 2016 compared to 2008. Finally, this study must be searched whether loan amount of Grameen Bank has significant or not significant effect on well-being of borrower households in the study area.

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1.2 Literature Review Some previous and empirical studies have been found that microcredit programme has revealed on household welfare in rural area not only in Bangladesh but also worldwide. The study was shown the effect of microcredit on the welfare of households of women borrowers in Tanzania. It found that the welfare of borrower households has improved more compared to non-borrowers. Household assets, children's education and medical treatments of borrower households have better than non-borrower households (Salia, 2014). The results of this study explained that age of borrowers, household income, interest rate and loan duration were main factors affecting credit accessibility. The results of multinomial logit model (MNL) was shown that age of borrowers, monthly expenditure and occupation were significant factors influencing the increase in income of the borrowers after involving with microcredit. Only monthly expenditure of borrowers had a positive correlation with the increase of welfare impacts of the respondents' expenditure (Santoso, 2016). The conceptual framework of microcredit programme consists of six major mechanisms such as microcredit service, savings service, non-financial services, clients and small businesses characteristics and the clients' well-being (Al-Shami et al., 2014). The study explored experiences of emotional stress by rural women of BRAC that emotional stress was lower among the happier non BRAC households. They explained mental health and emotional well- being of women (Ahmed et al., 2001). It was shown that microfinance had positive improvement in case of per capita annual earnings and spending and cultivable land holding. Without human capital index, livelihood, non-land asset and women empowerment were also affected by microcredit programme. Incident poverty rate in terms of head count among borrowers was 24 percent while the incident poverty rate of the head count was 35 percent among non-borrowers (Ali & Ahmed, 2014). It explored that both poor and non- poor took credit facilities for microfinance institutions and loan amount in case of non-poor was larger compared to poor. It was not only loan but also increase income and improving education. Conversely, assets, and family size have no significant impact on income improvement (Waheed, 2009). It is to explore the impact of microfinance on well-being and poverty reduction. The determinants of loan demand depended on type of businesses and level of educational attainment and male members wanted loan more compared to female. It has extended business activities and developed business condition through increase loan sanction and utilization of loan which increase income of the respondent, raise consumption of all durable commodities, educational cost, enhance asset and social welfare in the society (Taiwo, 2012). They investigated the impact of microfinance on household welfare that there was a positive impact on some household welfare indicators such as primary education

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16 European Journal of Research www.journalofresearch.de ¹ 1/2019 [email protected] and agricultural income after receiving loan but did not have an overall significant effect on both the short and long time of period (Thibbotuwawa et al., 2012). It was explained the efficiency of microfinance delivery mechanisms in Bangladesh whereas microfinance activities by MFIs had been increased. Number of loanees was also increased who live near poverty line. Results of the study were shown that there were improved two types such as social and economic development. Service charge of loan by MFIs was high compared to commercial banks (Ahmed, 2009). The study is to explore how housing microfinance contributes towards improved living conditions and welfare of low-income borrower households. The findings mentioned a significant and positive improvement in community status and housing conditions. Savings of borrower households increased because of reducing repairing and maintenance expenditure (Sobukwe-Whyte, 2016). He analyzed the linkage between microfinance and welfare conditions of the MFI's respondents in Rwanda. It found that the different type of business, assets and savings were increased improving gender equity that influenced the positive change and improvement of welfare condition (Herelimana, 2016). 1.3 Microfinance and Well-being of Borrower households of Grameen Bank United Nations has declared the year 2005 as the "UN International Year of Microcredit". Microfinance means financial services that provide the poor people who have no access to the formal banks and financial institutions. Grameen Bank also provides this service to poor people in the rural areas of Bangladesh. Microfinance has a positive contribution not only to reduce poverty but also to increase well-being among poor people in the rural area. (Taiwo, 2012). He has explained the relationship between microfinance loans and household welfare in Bungoma country in Kenya. The results of the study showed that microfinance has positive effect on educational level, healthcare, sanitation, consumption being living standards, and earning of extra income reducing unemployment by increasing engagement through self-employment (Omwange, 2012). It explored the impact of microfinance on economic, social and empowerment that results of the study showed both significant effect such positive and negative but they could not reach to conclusion (Duvendack et al., 2011). He researched the linkage between microfinance and welfare conditions of the MFI's respondents in Rwanda. Microfinance of NGO-MFIs had a positive contribution on size of business, own assets, savings, net profit and having improved gender equity that they influenced the change of welfare conditions of MFIs respondents (Herelimana, 2016). It was found that access to formal finance had improved welfare that influenced expenditure of households, standard of living and inequality. They found that there an inequality raised the level of education attainment between micro loanees and access to formal finance loanees in the study area.

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According to Sen (1994), economics has to pay attention to this Arrestor's question: what is the real well-being? Although this question is in the field of ethics, social scientists including economists have to answer and address it. Hence, he rejects the positive-normative dualism and advocates a combination of economics and ethics. This means getting to a society with low poverty does not go through only paying attention to "is" but it is necessary to go through "out" and for instance try to make new social egalitarian environment. According to monetary approach, a single dimensional phenomenon of poverty is measured by single index of income and low productivity of poor is reason of poverty (Dini and Lippit, 2009). Well-being is called a good form of life. Conceptual framework of well- being is shown that microcredit could be increased micro-savings of borrower households. Micro-savings of borrower households may be increased economic activities, developed social factors and also upgrade women empowerment. It is shown in Figure 1.1 as below

Figure 1.1: Conceptual framework of Well-being

Microfinance of Grameen Bank

Microcredit

Micro-savings

Economic outcome Social Outcome Women’s Empowerment

Income Income Savings Consumption Education Medical Social Earners access network

Well-being

Source: What is the impact of microfinance on the well-being of the poor and what are the conditions for making microfinance work for the poor in South Asia. (P. 37; 2016)

According to the several report of UNDP (1990-2016), the value of the human development index (HDI) of Bangladesh was 0.386 in 1990 and 0.468 in 2000 which increased to 0.545 in 2010 and 0.579 in 2016, respectively.

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1.4 Background of Grameen Bank It is known the history of Grameen Bank that some poor women made handicraft products and they had sold these products at lower price to middlemen compared to market. Those poor women in the village took credit from middlemen for buying raw material and making handicraft product. After seeing the scenario, professor Dr. Mohammad Yunus tried to solve this problem. He asked those poor women about demand of loan but it was petty. He provided some money (Tk.856) among 42 poor women from own pocket for buying raw material. He realized that it was not permanent solution. He went to conventional bank with those poor women and told to executive of banks for providing micro loan to those poor women. They denied providing micro loan to these poor women due to lack of collateral and small size of loan. They calculated administrative cost of the bank which would be high compared to amount of rate of interest due to petty loan. At least, the bank was agreed to provide petty loan to them if Yunus would be a guarantor of this loan. After feeling these problems, he took a decision to run primarily a project. In December 1976, Grameen Bank Project (GBP) operations were introduced at the Jobra village in Chittagong District of Bangladesh. On 2nd October 1983, Grameen Bank as Village Bank was established and started group based on microcredit programme among poor people in the rural area of Bangladesh. The interest rate depends on repayment capacity for example loan for income generating activities (IGA), housing loans, education loans and struggling members' loans. The rate of interest on loan category of Grameen Bank is found in Table 1.1.

Table 1.1: Rate of Interest on Loan Category of Grameen Bank Interest charge on loan for income generating activities (IGA) 20% Housing loans 8% Higher education loan during the study period of about 3-5 years 0% Higher education loan after the study period 5% Struggling Members (beggars) loans 0%

Source: Grameen Bank Annual Report, 2016

Table 1.1 shows that GB provides higher education loan during the study period of about 3-5 years without any interest and GB also provides struggling member (beggars) loans without any interest in terms of this condition of their leaving beggar. However, an authored capital and a paid-up capital of Grameen Bank were Tk.100 million and Tk.30 million, respectively, in 1983 (Majumder, 2002). At present, amount of total balance deposit and amount of loan disbursement were Tk.199497 million and

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Tk.1417716 million, respectively. It is indicated that the activity of Grameen Bank is extended day by day. 1.5 Objectives of the Study The prime objective of the study is to analyze the role of Grameen Bank (GB) on the well-being of borrower households. The prime objective is specified as below. 1. To find out the relationship between microcredit of Grameen Bank and the well-being of borrower households in the study area. 2. To analyze the effect of microcredit of Grameen Bank on the well- being of borrower households in the study area. 1.6 Hypothesis of the Study The following hypothesis of the study has been examined.

H0: There is no significant effect between loan amount of Grameen Bank and the well-being of borrower households at present.

H1: There is a significant effect between loan amount of Grameen Bank and the well-being of borrower households at present. 1.7 Study Area Adamdighi upazila is an upazila of Bogra district in Rajshahi division of Bangladesh in 1984 which was established as thana in 1821. The area of the upazila is only 164.84 sq Km. Total population of the upazila was 195186, where number of male and female was 97368 and 97818, respectively (population and housing census, 2011). The rate of literacy of the upazila was 34.4 percent in 1999 which stood at 50.4 percent in 2001 and 54.6 percent in 2011, respectively. About 20.5 percent and 79.5 percent people of the upazila in Bogra district lived in the urban and in the rural area, respectively. Most of people depend on agriculture. Main croups of the study area are paddy, potato, wheat, mustard seed and vegetables etc. There are fisheries (32), dairies (75) and poultries (33) respectively. Ownership of agricultural land and landless of the upazila (Bogra district) were at roughly 61.33 percent and 38.67 percent, respectively. Some people are employed in non-agricultural activities such as (manufactories) rice mill, ice factory, soap factory and (cottage industries) goldsmith, weaving, potteries blacksmith etc. Grameen Bank provides loan to poor people for farm activities and non-farm activities. The different types of loan of GB are flexible loan, housing loan, education loan for borrower children, beggar loan (struggling member loan). Overall country, there are 2568 branches of GB under 40 zonal offices. Sample size of the study was only 188. Three branches of Grameen Bank were selected randomly and these are Kundagram, Champapur and Chhatiangram of Adamdighi areas in Bogra district of Bangladesh. These are presented in Figure 1.2. Figure 1.2: Selected three branches in study area on Map at Adamdighi upazila of Bogra district.

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Figure 1.2: Map of Adamdighi Upazila

1.8 Methodology In spite of both primary and secondary data were used for this study but mainly primary data were used for statistical and econometric analysis. Primary data were collected from Grameen Bank borrowers who involved with microfinance of GB at least four years. Effect of microcredit of GB on the well-being of borrower households is examined by statistical tools and econometrics model. The well-being of borrower households is measured by well-being index. The effect of microfinance of Grameen Bank was also analyzed by OLS regression model. Well-being Index was constructed by four components such as consumption expenditure, education expenditure, health expenditure and investment expenditure. Well-being Index of each dimension (consumption expenditure, education expenditure, health expenditure, and investment expenditure in productive sector) is made choosing minimum and maximum values for each underlying quantitative variables. It is shown that the statement of each dimension is values between in minimum (0) to maximum (1). Dimension index can be written following Human development index (HDI) as below. Actual Score  Minimum Score Dimension Index  Maximum Score  Mimimum Score The value of each dimension index is between zero (0) to one (1). The value of each dimension index is (0) zero which indicates the minimum

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21 European Journal of Research www.journalofresearch.de ¹ 1/2019 [email protected] score as the actual score of all borrower households. This means the borrower household is least (zero) well-being than other borrower households. On the other hand, the value of each dimension index is one which shows the maximum score as the actual score of the borrower household among all borrower households. This indicates the borrower household has highest well-being compared to other borrower households. Well-being index (WI) is simple average of the four indicators (main indicators of expenditure) that can be written as follow.  CONEX  EDUEX  HALEX  INVESTEX  WI     4  Where WI = Well-being index; consumption expenditure (CONEX); education expenditure (EDUEX); health expenditure (HALEX); and investment expenditure (INVESTEX). Well-being index is divided into three levels (low value, medium value and high value) based on the UNDP (United National Development programme) criteria of human development level that presents as below. (i) The value of well-being index is less than 0.5 and it indicates low level. (ii) The value of index well-being is between in 0.5 to 0.79 and it indicates medium level. (iii) The value of well-being index is more than 0.80 and it indicates higher level. The value of well-being index is found that whether the well-being of borrower households at present has been improved or not and it is compared to before joining in GB. Again OLS (Ordinary Least Square) method was used to determine the factors that influence the well-being of borrower households in the study area. The R2 value indicates for goodness of fit that lies in between 0 and 1. The value of its close to one shows the better fit. In social science study it is difficult to get R2 to be close 1. Some studies in social science study were shown that R2 close to 0.40 and it means satisfactory acceptance (Rahman, 2007; Khandaker, 2003; Moksony, 1990). The well-being of borrower households is influenced by some variables such as average level of education (AEDU); average monthly income (AINC); number of income earners (ERNR); number of female income earners (FERNR); accumulated savings (ACCUSAV); microcredit of Grameen Bank (MICROCR); medical access (MEDIACC) and social network (SOCLNET). The second objective of the study is to estimate the effect of loan amount of Grameen Bank on the well-being of borrower households in the study area. OLS mode was applied to examine the determinants of the well-being of borrower households for the study. OLS model can be written as below.

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WI i  f ( X i ) ...(1)

Where, WIi = Well-being Index of borrower household after joining in

Grameen Bank and Xi = A set of socio-economic factors and microcredit of Grameen Bank that influence the well-being of borrower households. The OLS model is specified as indicators and it can be written as below:

WI i  0  1 X1i   2 X 2i  3 X 3i   4 X 4i  5 X 5i  6 X 6i   7 X 7i  8 X 8i ...(2) The equation (2) can be written in logarithmic form as follows:

lnWIi  0  1 ln X 1i  2 ln X 2i  3 ln X 3i   4 ln X 4i  5 ln X 5i   6 ln X 6i

  7 ln X 7i  8 ln X 8i ...(3) The equation (3) is called log-log liner model (OLS). In addition, the interpretation is a combination of the linear-log and log-linear model

(Benoit, 2011). Where both the dependent variable (WIi) and independent variables (Xi) are log transformed variables. The interpretation is explained as an expected percentage change in Well-being Index (WI) or Y when X increases by some percentage. It is shown that the coefficient of log X or independent variables is referred to as elasticity. The explanatory variables of the equation (3) are presented in Table 1.2 as below.

Table 1.2: Description of Variables using in OLS Model Name of Type Measurement Expected Variables sign

AINC (X1) Continuous Average monthly income (Tk.) + MICROCR Continuous Microcredit of Grameen Bank (Tk.) + (X2) AEDU (X3) Continuous Average level of education of borrower + households (years of schooling) ACCUSAV Continuous Accumulated savings (Tk.) +

(X4)

ERNR (X5) Continuous Number of income earners +

FERNR (X6) Number of female income earners +/- MEDIACC Dummy ‘1’ for access good medical service; otherwise +

(X7) ‘0’ SOCLNET Dummy ‘1’ for good social network; otherwise ‘0’ +/-

(X8)

It is found in Table 1.3 that partial correlation matrix of the explanatory variables is shown multicollinearity problem. The well-being of borrower households is influenced by some explanatory variables that are existed multicollinearity problem but not serious problem for OLS model.

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Table 1.3: Partial Correlation Matrix of the Explanatory Variables At Present Variables AINC MICROCR AEDU ACCUSAV ERNR FERNR SOCLNET AINC 1.00 MICROCR 0.04 1.00 AEDU 0.45 0.4 0 1.00

0.08 0.04 -0.03 1.00 ACCUSAV ERNR 0.16 0.13 0.14 0.05 1.00 FERNR 0.23 0.04 -0.02 0.07 0.31 1.00 -0.06 0.19 0.19 0.14 0.07 0.03 1.00 SOCLNET 0.03 0.18 0.10 -0.36 0.02 0.03 0.04 1.00 Source: Calculation from Field Survey, 2018 1.9 Result Findings The study is to analyze the effect of microfinance of GB on the well- being of borrower households in Adamdighi upazila of Bogra district. It is shown in Table 1.4 that the descriptive analysis of the study was described for example mean, standard deviation, minimum and maximum values of the main variables. Table 1.4: Descriptive of Variable Analysis of Sample at Present Maximum Std. Variables Minimum Mean Deviation WI at Present 0.18 0.87 0.57 0.21058 WI before joining in GB 0.11 0.82 0.35 0.19952 Average monthly income 1550.0 11433 4403.56 2064.59 Microcredit of Grameen 8000 53000 22500 19452.39 Bank Average level of education 1.00 8.00 3.40 1.44 Accumulated Savings 1050 9050 2450 1656.68 Number of income earners 1.00 4.00 1.78 0.86 Number of female income 0.00 2.00 0.39 0.46 earners Medical access 0.00 1.00 0.35 0.58 Social network 0.00 1.00 0.59 0.49 Source: Author’s own calculation, 2018 It is found in Table 1.4 that the mean value of WI before joining in GB was 0.35 with minimum 0.11 and maximum 0.82. On the other hand, minimum value of WI at present is 0.18, maximum 0.87 and mean 0.57, respectively. The value of well-being index (WI) of borrower households

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24 European Journal of Research www.journalofresearch.de ¹ 1/2019 [email protected] was increased at present compared to before joining in GB. Table 1.4 provides that average monthly income of borrower households was Tk.4403.56 with minimum Tk.1550 and maximum Tk.11433. Borrowers of GB took microcredit in between Tk.8000-53000. Microcredit of GB was employed by borrower households in income generating activities including farm and non-farming activities. It is found in Table 1.4 that the average of microcredit of Grameen Bank was Tk.8000.00 with maximum Tk.53000.00 and minimum Tk.22500.00. Accumulated savings money is so an important for many reasons of borrower households. Borrower households of GB can use it when they feel financial crisis. The mean of accumulated savings of borrower households of GB was Tk.2450.00 with minimum Tk.1050.00 and maximum Tk. 9050.00. It is shown in the table that means value of social network is 0.59 with minimum zero and maximum one. Table 1.5: Value of Well-being Index before Joining in GB and at Present Well-being at Present Well-being before joining in GB Values of Number of Percent Number of Percent Index Respondent Respondent 0.00-0.49 102 54.3 145 77.1 0.50-0.79 71 37.8 40 21.3 0.80-1.00 15 8.0 3 1.6 Total 188 100 188 100 Source: Author’s own calculation, 2018

Table 1.5 provides that 77.1 percent, 21.3 percent and 1.6 percent of borrower households before joining in Grameen Bank had the value of well-being index in between 0.00-0.49, 0.50-79 and 0.80-1.00 scale, respectively. On the other hand, it is found in Table 1.5 that 54.3 percent, 37.8 percent and 8.0 percent of borrower households have the value of well-being index in between 0.00-0.49, 0.50-79 and 0.80-1.00 scale at present. This means that the value of well-being index at present was better compared to before joining in Grameen Bank. Again, Figure 1.3 provides that the value of well-being index is compared between at present and before joining in GB.

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It is shown in Figure 1.3 that 16.5 percent and 6.4 percent of borrower households at present have already entered into between 0.50-0.79 and 0.80-1.00 scale, respectively, from in between 0.00-0.49 scale. About 22.9 percent of borrower households have turn out from in between 0.00-0.49, and they were able to improve their economic condition. It indicates that the value of well-being index of borrower households is better at present for income generating activities compared to before joining in Grameen Bank. Chi-square tests associate between the well-being of borrower households and microcredit of Grameen Bank at present. Table 1.6: Chi-Square Tests Associate between Well-being Index and Microcredit of Grameen Bank WI and 0-12000 12001-24000 24001-36000 36001- 48000 and Total Microcr 48000 above edit 00-0.49 32 45 20 3 2 102 0.50- 10 28 19 10 4 71 0.79 0.80- 1 3 4 3 4 15 1.00 Total 43 76 43 16 10 188 Percent 22.87 40.43 22.87 8.51 5.32 100 age Source: Author’s own calculation, 2018

It is shown in Table 1.6 that 22.87 percent and 40.43 percent of borrower households took microcredit in between Tk. 0-12000 and Tk.12001-24000, respectively. Table 1.6 provides that 22.84 percent, 8.51 percent and 5.32 percent of borrower households took microcredit from GB in the range of Tk.24001-36000, Tk.36001-48000 and Tk.48000 and above, respectively. It indicates that low percentage of borrower households took microcredit in the range of Tk.48000 and above compared to others range of microcredit. On the other hand, it is found in Table 1.7 that at present, this statement is investigated by Chi-square test which shows that there exists a significant relationship between microcredit of Grameen Bank and the well-being of borrower households. Table 1.7 provides that the value of Chi-square is 16.11 and it indicates a significant at level of 5 percent between microcredit and the well-being of borrower households at present.

Table 1.7: Chi-Square Tests between Well-being and Microcredit of Grameen Bank at Present Value df Asymp.Sig. (2-sided) Pearson Chi-square 16.111a 8 0.041 Likelihood Ratio 18.191 8 0.020 Source: Author’s own calculation, 2018

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Again, assets of borrower households are one important factor. Most of borrower households have no enough assets such as fridge, furniture, etc. The value of assets of borrower households is calculated in cash. It is found in Table 1.8 that 11.70 percent, 19.15 percent and 27.66 percent of borrower households have the value of assets in between Tk.0-15000, Tk.15001-30000 and Tk.30001-45000, respectively. It is observed in Table 1.8 that 23.94 percent, 15.96 percent and 1.59 percent of borrower households have the value of assets in the rage of Tk.45001-60000, Tk.60000-75000 and 75001-above, respectively. In the level of 75001 and above, only 1.59 percent of borrower households have the value of assets that it indicates low percentage in all range of values.

Table 1.8: Chi-Square Tests Associate between Well-being and Value of assets of borrower households WI 0- 15001- 30001- 45001- 60000 - 75001- Total Percenta and 15000 30000 45000 60000 75000 above ge Microc redit 00-0.49 12 22 26 28 14 0 102 54.3 0.50- 10 11 21 13 14 2 71 0.79 37.8 0.80- 0 3 5 4 2 1 15 1.00 8.0 Total 22 36 52 45 30 3 188 100 Percent 11.70 19.15 27.66 23.94 15.96 1.59 100 age Source: Author’s own calculation, 2018 On the other hand, it is found in Table 1.9 that at present, this statement is investigated by Chi-square test which shows that there exists a significant relationship between value of assets and well-being of borrower households. Table 1.9: Chi-Square Tests between Well-being and value of assets of borrower households Value df Asymp. Sig. (2-sided) Pearson Chi- 15.072a 8 0.061 square Likelihood Ratio 14.191 8 0.027 Source: Author’s own calculation, 2018 Table 1.9 provides that the value of Chi-square is 13.07 and indicates significant relationship at 10 percent.

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1.9.2 Results of OLS Regression The results of OLS regression for well-being of borrower households are presented in Table 1.10. The R2 value means for goodness of fit that lies between 0 and 1. The regression model shows that over all significant which indicate 54 percent variation of the well-being of borrower households as dependent variable is influenced by the explanatory variables. The slope calculates of all variables have the expected signs in the model. The well-being of borrower households mainly depends on average monthly income, microcredit of Grameen Bank, average level of education, accumulated savings, number of income earners, number of female income earners, medical access, and social network, respectively. The value of Durbin-Watson test is 1.943 which indicates close to 2 and there is no autocorrelation problem in the OLS model. The value of variable inflation factor (VIF) is 4.508 which are below of 10. VIF and partial correlation matrix indicate that multicollinearity is not serious problem for OLS model. From OLS regression analysis, it is found in Table 1.10 that the coefficients of all explanatory variables are positive but not statistically significant with the well-being of borrower households. It is observed in Table 1.10 that the coefficients of microcredit from GB and accumulated savings are statistically significant at 10 percent and 1 percent, respectively, and positive relationship with well-being of borrower households.

Table 1.10: OLS Regression Analysis for borrower households’ Well-being Variables Coefficien t-ratio Prob. 1

t VIF Constant 57.621** 5.46 0.000 - * Average monthly income (AINC) 0.097*** 4.28 0.001 0.164 Microcredit of GB (MICROCR) 0.099* 4.76 0.056 0.184 Average level of education (AEDU) 0. 021 0.92 0.827 0.229 Accumulated Savings (ACCUSAV) 0. 053*** 2.65 0.000 0.171 Number of income earners (ERNR) 0.045** 2.02 0.046 0.698 Number of female income earners 0.019*** 3.46 0.002 (FERNR) 0.833 Medical access (MEDIACC) 0.028 0.63 0.528 0.144 Social network (SOCLNET) 0.041* 1.53 0.065 0.197 Number of obs. =188; F (8,179)=26.64; Prob.> F =0.0000; R2 =0.5435; Adj R2 =0.5231; and Root MSE = 3486.4; Durbin-Watson= 1.943 Note: *** Significant at 1%; ** Significant at 5% and * Significant at 10% Source: Calculation from Field Survey, 2018

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It indicates that well-being of borrower households is increased by 0.099 percent and 0.053 percent, respectively, if both microcredit of Grameen Bank and accumulative savings will be increased by 1 percent separately. It may be fact that borrower households get loan opportunity and it employ in income generating activities. In addition, a part of income keeps as savings in this institution. So the well-being of borrower households became an improvement more at present compared to before joining in GB. It is found in Table 1.10 that the coefficients of average monthly income, number of income earners, number of female income earners and social network are 0.097, 0.045, 0.019 and 0.041 and they are statistically significant at different level and positive relationship with the well-being of borrower households. This result means that well-being of borrower households is increased by 0.097 percent, 0.045 percent and 0.019 percent, respectively, if average monthly income, number of income earners and number of female income earners will be increased by 1 percent in the terms of those. It may be fact that after involving with microcredit of Grameen Bank, number of income earner male and female increased in borrower households due to taken loan and employed themselves in productive activities. In addition, number of female income earners would be got opportunity to employ in productive sector beside household activities. Again, it is found that well-being of borrower households is improved by 0.041 percent if borrower of Grameen Bank will be said 'yes' in case of progress of social network. It may be fact that after joining in GB, borrowers can discuss problem with their chairman of group or members of that group. However, borrowers of GB usually come to the meeting weekly and there information could be transformed one another. Social network or communication with one another among the borrowers of GB is better at present compared to before joining in GB. However, the coefficients of average level of education and medical access are not statistically significant. So they bear no significant meaning. 1.9.3 Paired- t Test Above hypothesis of the study is examined using paired sample t-test. Paired sample t-test which is a statistical technique that was used to compare two population means in the case of two samples that are correlated. The test is based on the paired differences between two mean values. Paired sample t-test was also used to test the effect of microcredit of GB on the well-being of borrower households at present and before joining in GB.

Table 1.11: Paired Sample t-test Statistics (Paired Differences) Means 95% Confidence interval Std. t df Sig. of the Difference Error Value (2 Pair Lower Upper Means tailed) Well-being 0.193 0.193 0.392 0.050 8.81 18 0.000 before 7 joining in GB and at present Source: Author’s Own Calculation, 2018

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It is found in Table 1.11 that the value of t-test statistics has been found 8.81 having p-value 0.000 which indicates significance at 1 percent level of significance. So, H0 is rejected against H1 which indicates that mean of the well-being of borrower households before joining in GB is not equal to the mean of the well-being of borrower households at present. The value of mean difference is 0.193 which also support to the alternate hypothesis. Table 1.12: Paired Sample Mean -t test Well-being Mean N Std. Deviation Std. Error Mean Well-being at 188 0.64060 0.04672 0.57 present

Well-being before 0.35 188 0.46678 0.034 joining in GB Source: Author’s Own Calculation, 2018 Table 1.12 provides that the mean value (0.57) of well-being of borrower households at present is more compared to the mean value (0.35) of well- being of borrower households before joining in GB. It indicates that the mean value (0.24) of well-being of borrower households has been increased more at present compared to before joining in GB. Table 1.13: Paired Sample Correlation Pair Well-being of borrowers before N Correlation Sig. joining in GB and at present 188 0.354 0.000 Source: Author’s Own Calculation, 2018

Table 1.13 shows the value of correlation of the paired samples which indicate well-being of borrower households before joining in GB and at present. The above table shows that the correlation value is seen 0.354 having p-value 0.000 which is also significant at 1 percent level. 1.10 Conclusion and Recommendations This research is empirical and both results of statistical and econometrics analysis is shown that the well-being of borrower households depends on some selected variables. It is found in the study that the well-being of borrower households at present is compared to before joining in Grameen Bank. The value of well-being index of borrower households at present was increased more compared to before joining in GB. Well-being index indicates that about 22 percent of borrower households turn out the scale from 0.0-0.49. Vienna, Austria Generalization of Scientific Results

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They have improved well-being of borrower households and they have also entered into scale in between in 0.50-0.79 and 0.80-1.00 scale, respectively. The value of well-being of borrower households before joining in GB was 0.35 which increased to 0.57 at present. Chi-square test shows an association between the well-being of borrower households and microcredit of Grameen Bank at present is statistically significant and the value of Chi-square was 16.11. Again, the value of Chi-square is 15.072 and its result indicates that there is a significant relationship between value of assets and well-being of borrower households at present. The results of OLS regression model show that the coefficients of average monthly income, microcredit of GB, accumulated savings, number of income earners, number of female income earners and social network are statistically significant at different level with the well-being of borrower households without average level of education and medical access. It is found that well-being of borrower households is increased by 0.099 percent and 0.053 percent, respectively, if both microcredit of Grameen Bank and accumulative savings will be increased by 1 percent. It may be fact that borrower households get loan opportunity and it employ in income generating activities. After joining in GB, borrowers of GB employed themselves more in productive sector besides household activities. It is clear that microcredit of Grameen Bank has positive and significant effect of increase the well-being of borrower households at present. Recommendations (i) Government should ensure that microcredit is more reasonable and available to rural household. (ii) Microfinance institutions should provide credit in disadvantage rural area's households of Bangladesh. (iii) There should organize enough training and enlighten of education for uneducated people so that they are to be more confident for investment in more profitable sectors. (iv) Amount of loan from Grameen Bank is not exhausted through consumption by borrower households. Therefore institution should be monitoring and supervising sometimes. (v) Government encourages to MFIs so that they provide a specific part of loan to young and unemployment energetic people who want to employ themselves in non-farm activities willingly. (vi) The rate of interest on credit of GB should set up compared to commercial banks in Bangladesh. Life time of loan and loan size should extend and borrowers will repay loan monthly against weekly.

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