The Theory of Planned Behavior and Microfinance Participation: from the Perspective of Nonparticipating Rural Poor in Bangladesh

Abstract

The main objective of the study is to understand the reasons for low participation in microfinance institutions (MFIs) among the rural poor in Bangladesh by investigating the factors that influence participation behavior of the rural poor in MFIs. The study identified eight belief constructs from the microfinance literature which are modeled together in examining the factors that influence the participation. Data were collected through face to face interview from six major areas of Bangladesh during the period of May, June and July in 2011. Structural Equation Modeling (SEM) is employed in analyzing data. Among the eight variables only three variables such as fear of getting into risk of loan, individual preference of taking loan, and friends’ negative advice were appeared statistically significant for influencing the poor villagers’ participation in MFIs in rural Bangladesh.

Keywords: Microfinance, MFIs, Barriers of participation, Rural poor