"Innovations" During COVID-19: Microfinance in Bangladesh

Area of Science:

• Development Studies
• Sociology
• Public Policy

Background:

• Microfinance institutions (MFIs) play a crucial role in Bangladesh's socio-economic landscape.
• The COVID-19 pandemic presented unprecedented challenges and opportunities for non-governmental organizations (NGOs).
• Understanding the adaptive strategies of MFIs is key to assessing their societal impact.

Purpose of the Study:

• To analyze how microfinance institution innovations during the COVID-19 pandemic influenced NGO consolidation in Bangladesh.
• To examine the evolving role of MFIs as intermediaries between the state and the public.
• To investigate the relationship between technological adoption and microfinance participant behavior.

Main Methods:

• Qualitative study employing semi-structured interviews.
• Interviews conducted in 2020 with key personnel from three major Bangladeshi NGOs (Grameen, Sajida Foundation, Brac).
• Interviews conducted in 2018 with 20 microcredit recipients regarding their use of financial services.

Main Results:

• MFIs scaled up operations by integrating relief provision functions.
• Financial services offered by MFIs became more deeply embedded within the community.
• NGO governance structures were strengthened through the intermediary role of MFIs.
• Pre-pandemic data indicated microfinance participants were hesitant about adopting new technologies.

Conclusions:

• MFIs' pandemic-driven innovations facilitated greater NGO consolidation in Bangladesh.
• The enhanced intermediary role of MFIs bolstered NGO governance and state-citizen linkage.
• Technological reticence among microfinance participants prior to the pandemic warrants further investigation in the context of service delivery.