Collateral free credit and women led enterprise outcomes in Bangladesh evidence from a matched evaluation of the Bangladesh Bank refinancing scheme

Bangladesh Bank runs a refinancing scheme that lets women who own small enterprises borrow without collateral. Whether the women who use it end up better off than similar women who do not has never been tested against a comparison group. This study builds one. We surveyed 193 women entrepreneurs, 93 who had taken a scheme loan and 100 who had not and estimated each woman’s probability of participating from five characteristics recorded before the loan: her education, her age, whether the business is urban or rural, how long it has traded, and whether she had received business training. Women were then paired one to one on that estimated probability, which produced 61 comparable pairs. Inside the matched sample the difference in employment is large. Enterprises in the scheme employ about five times as many workers as their matched counterparts, an incidence rate ratio of 5.108 with a 95 per cent confidence interval of 3.564 to 7.320. Household income runs the other way, with scheme women sitting in lower income bands, an odds ratio of 0.040. Read together the two results fit a business growing on borrowed money, meeting a much larger wage bill and returning part of the loan to the enterprise rather than the household. The survey cannot separate that reading from the simpler possibility that the scheme reached poorer women to begin with, and we do not claim it can. A sensitivity analysis shows that an unmeasured difference between the two groups would have to make a woman close to four times more likely to join before the employment result lost significance. Because the data comes from a single round of interviews and no pre-loan measure of enterprise size exists, these are associations consistent with the scheme working rather than experimental proof that it does. One finding needs no such caution: not one woman in the comparison group had heard of the scheme.