Comparative Evaluation of Conventional and Interest-Free Microfinance in Poverty Alleviation: Evidence from Bangladesh
Journal of Economic Cooperation and Development, cilt.47, sa.3, ss.279-320, 2026 (Scopus)
- Yayın Türü: Makale / Tam Makale
- Cilt numarası: 47 Sayı: 3
- Basım Tarihi: 2026
- Doi Numarası: 10.5281/zenodo.22007654
- Dergi Adı: Journal of Economic Cooperation and Development
- Derginin Tarandığı İndeksler: Scopus, ABI/INFORM, EconLit, Index Islamicus, Business Source Ultimate (EBSCO)
- Sayfa Sayıları: ss.279-320
- Anahtar Kelimeler: Bangladesh, conventional microfinance, interest, Islamic microfinance, poverty
- İstanbul Ticaret Üniversitesi Adresli: Evet
Özet
Microfinance has emerged as a key instrument for alleviating extreme poverty in developing countries. The study investigates traditional and interest-free microfinance impact on the poverty reduction in Bangladesh, using the ordinary least square (OLS) approach with the data from 2010 to 2020. The research uses four poverty indicators: upper poverty rate, extreme poverty rate, infant mortality rate, and basic sanitation rate for analyzing the impact of microcredit. The result finds that interest-free microcredit has substantial effects to reduce both poverty and infant mortality rates. However, traditional microfinance (MF) has a significant positive impact on the poverty level, meaning that MF increases poverty level due to high interest rate. Furthermore, interest-free microfinance (IFM) has a positive impact on increasing the basic sanitation rate, but conventional MF has negative effects on basic sanitation. In contrast, IFM has a better impact on poverty alleviation compared to traditional microfinance in Bangladesh. The study assists in achieving SDG 1 for no poverty, SDG 3.2 for prevention of child mortality, SDG 6 for clean water and sanitation, SDG 8 for decent work, and SDG 10 for reducing inequality. The research provides valuable insights for policymakers to address poverty related social challenges.