LAUSR

This paper investigates the impact of microcredit programs on child schooling in rural Bangladesh using cross-sectional data from 439 households across 20 villages of four districts of the country. A child’s school outcomes are measured by school enrolment, school attendance and grade attainment (measured by the right grade for age). Our results reveal that participation in microcredit programs has a significant positive effect on school attendance but no effect on either school enrolment or grade attainment, suggesting that care should be taken in assessing the effectiveness of microcredit programs. Despite the fact that microcredit programs can alleviate poverty and contribute to the rural economy, these can also result in unintended consequences such as adverse effects on children’s schooling. Policies aiming to improving the children’s educational achievement in rural households should consider providing or enhancing subsidized educational stationery and meals besides providing free universal education among the children of microcredit participants.