Does control over microfinance matter in reducing domestic violence? evidence from rural Bangladesh

Abstract

We estimate the effect of womens participation in microfinance proframs on domestic violence by control over credit, using a unique dataset collected from 69 villages in Bangladesh during 2006-2007. We use the Two Stage Least Squares-Fixed Effect (2SLS-FE) method to correct for potential endogeneity problems originating from nonrandom program placement, village level heterogeneity and unobservable household attributes. Our results show that womens participation in microfinance does not diminish domestic violence against them significantly because of their limited control over the use of credit. In our data, only 13% of women can use their credit and in average experience 1.002% less physical violence for increasing 1% of their credit amount.