Identifying the Socio- Economic Characteristics of the Iranian Borrowing Households and the Impact of Micro-Credits on the Poverty Gap

Abstract

The Impact of micro-credits on household’s poverty gap is considered as one of the most important social and economic issues. In this research, the socio- economic characteristics of the borrowing households are identified by using a Logit model, based on the urban and rural household budget survey data for 2011. Then, the impact of micro-credits on poverty gap of poor households is examined by estimating regression models. The result of the Probit analysis indicates that the coefficients of the age of household head, employment of the household head, household size, and urbanization are significantly positively related to households’ access to credit. However, the coefficient of household expenditure is negatively related to households’ access to credit. This implies that the low-income household is more likely to have not access to micro-credits. Also, the regression analysis shows that the access to micro-credits is not a significant explanatory variable for poverty gap of the poor households. This indicates the micro-credits has no impact on the poverty reduction of the poor households.

Keywords

• consumer economics
• credit constraint
• micro-credits
• poverty gap
• iran