Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/185279 
Year of Publication: 
2018
Series/Report no.: 
IZA Discussion Papers No. 11819
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Microcredit has long been hailed as a powerful tool to promote livelihoods and reduce poverty through entrepreneurship. However, its impacts on people's subjective well-being remain underexplored. We present a unified theoretical framework for analyzing the effect of microcredit-enabled entrepreneurship on overall life satisfaction – a key manifestation of subjective well-being. Empirically, we apply an instrumental variable approach to a unique census-like household survey conducted in three villages of Bangladesh in 2013. In spite of having no direct effects, we find that microcredit borrowing has an indirect negative effect on overall life satisfaction, through increased worry. On a positive note, we find that female micro-borrowers experience an increase in satisfaction with financial security and achievement in life. We also provide evidence that micro-borrowers with higher levels of assets experience an increase in satisfaction with financial security.
Subjects: 
depression
happiness
life satisfaction
entrepreneurship
microcredit
worry
female empowerment
Bangladesh
JEL: 
I31
J16
L26
Document Type: 
Working Paper

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