General equilibrium analysis of Bangladesh with special attention to Bangladesh.

摘要

This research focuses on an economic assessment of micro finance institutions (MFIs). Usually researches on MFIs consist of pure theoretical, empirical and institutional view. However, this study provides a different view by incorporating the financial model of MFI in a general equilibrium model. It is a combination of a theoretical exploration and a case study of the micro finance institutions.This research tries to identify the viability of the MFIs, and the reasons behind their existence. Contrary to the MFIs, regular commercial banks do not provide loans to poor micro-entrepreneurs, and they view these micro-entrepreneurs as risky clients. A commercial bank considers costs and benefits as important decision making factors in providing loans. It is possible to analyze the behavior of a bank like any other economic agent. A bank also tries to maximize its utility given its budget constraint.First, using an existing model of bank it is shown why micro entrepreneurs are redlined by commercial banks. Secondly, through optimization the question is addressed as to why the supply of micro commercial loan is zero under a bank's problem while it is positive under the problem of a MFI.Third, a computable general equilibrium (CGE) model is built to incorporate the behavior of commercial banks and MFIs. The CGE model provides an explanation of the real as well as the financial side of an economy. The two CGE models that are generated are one with commercial banks but without MFIs and one with commercial banks with the MFIs.Fourth, the general equilibrium model is based on the real financial social accounting matrix (RFSAM). Each cell of RFSAM is represented by an equation in the CGE model. The data for the real financial CGE model is discussed in detail in this part. As micro finance is a reality in Bangladesh attempts are made to explain the financial side of the economy in Bangladesh using this analysis of financial institutions. The most recent real SAM of Bangladesh is developed by Arndt, Dorosh, Fontana and Zohir with El-Said and Lungren (2002) for the year 1999-2000. To keep conformity to that real SAM financial Sam is developed for the year 1999-2000. Later on these two SAM are combined to develop the RFSAM (1999-2000) of Bangladesh.In the end, as a case study this research explores the welfare impact of MFIs in Bangladesh. A simple static analysis is done to compare the CGE models of Bangladesh that are developed through this study and to find out if MFIs (Grameen Bank) make any difference in the economy of Bangladesh. Computational findings show that when we add microfinance institutions as another type of financial intermediary together with the regular commercial banks in the general equilibrium model of Bangladesh economy income, wealth, savings, consumption and utility of the rural poor household increase. Our findings indicate an increase in the value of the overall social welfare function due to inclusion of MFIs in the Bangladesh economy.