Impact of Ex-Ante Access to Microfinance on the Coping Strategies to Cope with Monga of Poor Households in North-Western Bangladesh

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This paper examined the role of access to microfinance as an ex-ante measure of income
smoothing on the coping strategies of poor households in north-western Bangladesh during the
phenomenon of seasonal food insecurity known as monga. The analysis suggests that the
nature and intensity of coping strategies adopted by households depends on their
assets/abilities and household characteristics. An endogenous switching regression approach
was used to control hidden potential self-selection biases of the households in choosing to be a
member of a microfinance program, and in turn having ex-ante access to credit. The selection
equation clearly identifies the important determinants of ex-ante access to microfinance. The
households with larger land holdings and living in char areas are less likely to participate
ex-ante in microfinance. Conversely, or households with a higher dependency ratio, older
household heads, and a tin roofed room or house are more likely to access microfinance prior
to monga. Differences were also observed across occupational types and participation in
microfinance, with day laborers less likely to participate ex ante in microfinance than other
The findings from the endogenous switching regression model are quite clear. Ex-ante access
to microfinance does reduce dependency on various potentially erosive coping strategies.
Dependence on advance sale of labor, sale of assets and informal borrowing as coping
strategies during monga is lower for poor households having ex-ante access to microfinance.
The probability of migration as a coping strategy is also lower for household’s with ex-ante
access to microfinance. The analysis also suggests that ex-ante access to microfinance can

KHAN Md. Tareq Ferdous