How effective is a Big Push to the Small? Evidence from a Quasi-random Experiment

This paper, using data from a quasi-random control experiment on BRAC’s “Targeting the Ultra Poor” program in Bangladesh, investigates whether a one-off large grant to the extreme poor enables them to participate in the regular microfinance program that typically excludes them. The extreme poor were provided income-generating assets and continued support over 18 months that included, among others, enterprise management assistance, subsistence allowance, and support for building social network. Some eligible extreme poor who did not receive assets for reasons unrelated to the ones that can lead to self-selection bias are treated as the control group. The results for 2002 baseline and 2005 repeat survey data show that such a big push has indeed significant impact on graduation to the regular microfinance program. Social capital has significant effect on borrowing decision, and awareness of social and legal issues has significant effect on both NGO membership and borrowing decision.