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Geography of Rural Enterprise Banking and Microfinance Institutions in Bangladesh

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Universitat Autònoma de Barcelona. Departament de Geografia, 2015.
In remote areas of Bangladesh, it can be difficult for entrepreneurs, businesses and farmers to obtain needed bank loans, as banks are typically located in and around administrative centres. In addition, the banks have limitations in their product design (credit and savings) and have mostly avoided the challenges of rural enterprises. During the 1970s, the concept of the Microfinance Institution (MFI) emerged, based on the non-governmental organization model and favouring locations in rural areas not far from the administrative centres and rural markets. In this untapped market, MFIs grew by taking an institutional good practices approach and offering products designed to cater to low-income households and enterprises, although they still face legal constraints in holding public savings deposits. In addition, although the MFI reaches less accessible areas because of its organization pattern, its attempts to upscale MFI credit are not widely successful due to both unwillingness and inability of the existing microfinance client pool to repay loans. Therefore, it is important to explore which entity (bank or MFI) has an advantageous geographic distribution and institutional good practices to meet the needs of rural enterprise.
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