BRAC Bank is a distinctive bank that works for promoting small and medium enterprises (SMEs), especially small enterprises, who are the missing middle in the credit market and one of the key drivers for the growth of our economy.
Being pioneer in SME credit, BRAC Bank undertook a longitudinal study to assess the impact of its credit program on the sustainability (dimensions: financial, economic, social & environmental) of SME borrowers of the country. To determine and validate the different dimensions of impact, a common set of indicators were identified and used throughout the study. The panel study was conducted in three independent rounds over randomly chosen borrowers. First round was conducted in 2011, second round in 2012 and the third one in 2013. Standard statistical tools for impact evaluation to deal with both panel and cross-sectional data were applied in the study to compare the conditions of first time (control) borrowers with the repeat (treated) borrowers. Besides, the first round was coauthored, and the subsequent two rounds of the panel study were reviewed and validated by Centre for Corporate Governance and Finance Studies, a think tank of University of Dhaka.
Based on the analysis, a number of significant positive impacts were we found on the panel borrowers as a result of financing from BRAC Bank. Panel borrowers were found to be better off in terms of their growth in business size, sales and its growth, profitability and reduced debt burden. There had also been positive economic and environmental impacts for the panel borrowers. Borrowers’ social engagement also improved due to repeated financing from BRAC Bank.
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