A Project Report

on

Performance of NGOs for Alleviation of Poverty in Bangladesh

Submitted To

Department of Finance & Banking

Faculty of Business Studies
Comilla University
Cumilla

Supervised By

Md. Al-Amin
Lecturer
Department of Finance & Banking
Faculty of Business Studies
Comilla University
Cumilla

Submitted By
Md. Atiq Shahriar Bhuiyan
Class Id: 11617051
Registration No: 11617051
Department of Finance & Banking
Session: 2015-16
Comilla University
Cumilla

Date of submission: 25.01.2021

Letter of Transmittal
25thJanuary 2021

Md. Al-Amin
Lecturer &
Internship Supervisor
Department of Finance & Banking
Faculty of Business Studies
Comilla University
Cumilla-3506, Bangladesh.

Subject: Submission of Project report on “Performance of NGOs for Alleviation of

Poverty in Bangladesh”
Honorable Sir,

With due respect, I would like to state that it is a matter of great pleasure and honor for me to
submit my project report on “Performance of NGOs for Alleviation of Poverty in Bangladesh”.
The purpose of this report will be to understand the role of NGOs in poverty reduction in
Bangladesh. As this report is an obligatory requirement to complete our BBA Program. It was
both a pleasure and a challenge as well for me to work under your supervision and I can never
repay my indebtedness to you.

It has been a very positive and uplifting experience, as I have learnt a lot that wouldn’t have been
possible otherwise. The final report is based on data from various sources and basis on relevant
findings. To provide a clear view, some graphs, tabular data have been added. I have tried my
level best to include all the relevant information to make the project report informative and
comprehensive.
Lastly, I would like to express my sincere appreciation and thanks to your help while preparing
the report. I shall be glad to answer any queries that you may have in this regard.

Sincerely yours,

Md. Atiq Shahriar Bhuiyan

ID No:11617051
Reg.No:11617051
Session: 2015-16
Department of Finance and Banking
Comilla University

I
Supervisor Declaration
This is to certify that the project report on “Performance of NGOs for Alleviation of Poverty
in Bangladesh” is done by, Md. Atiq Shahriar Bhuiyan, ID No: 11617051, Reg No:
11617051, Session: 2015-16 as the partial fulfillment of Bachelor of Business Administration
(BBA) degree from Department of Finance and Banking, Faculty of Business Studies, Comilla
University, Cumilla.
This project report has been prepared under my guideline and is a report of the authentic work
carried out successfully.

…………………………………
Md. Al-Amin
Lecturer,
Department of Finance & Banking.
Faculty of Business Studies.
Comilla University.

II
Student Declaration

I somberly declare that the work in this project report on “Performance of NGOs for
Alleviation of Poverty in Bangladesh” is an original work done by me under the supervisor of
Md. Al-Amin, Lecturer, Department of Finance & Banking, Comilla University.

No part of this report has been previously submitted to any other University/ College/Institution/
Organization for any academic certificate/ degree/ diploma.

This work I have presented does not breach any existing copyright and no portion of this report
is copied from any work done earlier for any degree. Information derived from the published and
unpublished work of others has been acknowledged in the text and references

I further undertake to identify the department against any lost or damage arising from breach of
the forgoing obligation, If any.

Md. Atiq Shahriar Bhuiyan,

ID No: 11617051,
Reg.No: 11617051,
Session: 2015-16
Department of Finance and Banking
Faculty of Business Studies
Comilla University, Cumilla.

III
Acknowledgement
At the very beginning I would like to express my deepest gratitude to almighty for giving me
the strength and the composure to finish the task. Project report is an essential part of the BBA
program. It is a great pleasure to prepare project report on “Performance of NGOs for
Alleviation of Poverty in Bangladesh”

On this manner I would like to express my deepest gratitude to my honorable academic

supervisor, Md. Al-Amin along with all other respected teachers for their all-time support and
guidelines during BBA program, Department of Finance and Banking, Comilla University for
permitting and guiding me to prepare the report.

IV
Abstract
Poverty is considered as a curse and a big barrier for development of any country through the
world especially country like Bangladesh. Poverty is the state when people deprived of their
basic needs such as food, cloth, shelter, education, treatment and lack the financial resources for
minimum standard of living. In Bangladesh, poverty is a constant feature for many unlucky
people due to specific reasons for which the poor are becoming poorer and the richer are
becoming richer. For solving this problem, the role of NGOs is inevitable beside government
actions. This report would examine empirically the impact of NGOs on poverty alleviation in
Bangladesh.

Those organizations which work for voluntary or non-profit motives are basically called NGOs.
They mainly provide services to the vulnerable and deprived people of the society in order to
encourage them for income generating activities. Bangladesh, recently, has declared as middle-
income country by World Bank. But still Bangladeshi many people face many social and
economic problems. The situation has got worse when government has failed to help them due to
limited resources. In such severe situations NGOs have appeared as a helping hand. The main
goal of NGOs is generally development or poverty alleviation.

But there is a controversy among researchers about the subject matter. Some says NGOs are
eradicating poverty and some says not. In this project report I would try to solve the argument.
For this, I choose eights NGOs (ASA, GB, BRAC, TMMS, BURO, UDDIPAN, SAJIDA, JCF)
and evaluate all necessary data from annual reports like loan, savings, assets, income,
expenditure, surplus etc. Those NGOs are conducting several activities or programs like easy
loans facilities, education program, skill and training facilities, sanitation, health and nutrition,
agriculture program and so on for reducing poverty and increase living standard.

Then I formulate some ratio based on secondary data from which Asset to Surplus is considered
as a dependent variable and Loan to recovery, Loan to Savings and Asset Turnover are
considered as independent variables. Therefore, I put those variables in Eviews11 and perform
several statistical analyses like descriptive analysis where Mean, Median, Standard deviation,
Skewness, Kurtosis and Jarque-Bera test. In addition to T-test, CHI-Square test, normality test,
andmultiple regression model, I also perform relationships between variables.

After the analysis of collected data and information, it shows evidence that NGOs can be
considered as an effective tool for poverty reduction in developing countries like Bangladesh. To
be more ensure that how much and how the NGOs really reduce poverty, further study and
research should be carried out in future.

V
 Table of Contents
Chapter Contents Page
Introduction
1.1 Background of the study 2
1.2 Objectives of the Report 3
1.3 Research Question 3
1 1.4 Research Hypothesis 3
1.5 Research Methodology 3-4
1.6 Limitations of the Report 4
Literature Review
2 2.1 Literature Review 6-7
Overview
3.1 Concept of Poverty 9
3.2 Current condition of Poverty in Bangladesh 10
3
3.3 Causes of Poverty in Bangladesh 11
3.4 NGO 12
3.5 Role of NGOs in Poverty reduction and Social
development 12
Financial Performance
4 4.1 Five Years Average Financial Performance 14
4.2 Graphical presentation of performance 15-18

Statistical Analysis
5.1 Descriptive Statistics 20
5.2 Regression Analysis 21-23
5 5.3 Analysis no. 1 24
5.4 Analysis no. 2 25-26
5.5 Analysis no. 3 27-28
5.6 Analysis no. 4 29
Findings, Recommendation and Conclusion
6.1 Findings 31
6 6.2 Recommendation 32
6.3 Conclusion 33
References 34
Chapter: 01
Introduction

Page | 1
 1.1 Background of the study

Poverty is a continuous expanding problem for the developing countries like Bangladesh. It is
called as a curse through the world. Poverty acts as an obstacle of economic development of a
country. Poverty exists in different levels throughout the country. The poor people especially the
poor who are under extreme poverty line deprived of basic needs such as food, cloth, shelter, and
so on at their daily lives. They don’t get a proper education, a proper treatment for ensuring a
sound health. This paper is concentrating on contribution of NGOs on poverty alleviation in
Bangladesh.

Non-government Organizations (NGOs) are the organizations viewed as non for profit involved
in socio-economic development of the communities generally and rural poor communities
specifically (Clark, 1999). One of the tools for poverty reduction is micro finance, which is
worldwide recognized since the 1990s. To reduce poverty in Bangladesh, microfinance, has
positive impact and which has been proven (Hossain & Knight, 2008; Venkataramany & Bhasin,
2009; Chemin, 2008). Micro-finance institutions like Grameen Bank, Brac, Asa, Buroetc are
performed many humanitarian activities and programs to make the poor financially solvent.
Those programs are education program, health care, employment creation, training programs,
agricultural development, and women empowerment programs etc which are improving their
social position as well as standard of living.

In Bangladesh most of the NGOs run their activities by receiving foreign and local grants. NGOs
perform their social development and poverty reduction activities successfully that’s why donors
are interested to paying grants to them and the amount of grants are increasing year by year. By
taking micro finance loan, poor people get collateral free loan at a low interest rate and use it for
developing microenterprise, funding for children’s education, constructing homes and so on.
Apart from microcredit, NGOs are developing several financial facilities line micro-insurance
and micro-mortgage and they also start to collect deposits from the members or people who
indicate financial stability and safety of the poor.

The main objective of the study will be attained throughout the various statistical analysis and
data collection. The overall study aims to evaluate and examine the role of microfinance in
eradicating the poverty in Bangladesh.

Page | 2
 1.2 Objectives of the Study

 Main objective
The main objective of the study is to know the contribution of NGO in reduction of poverty in
Bangladesh.

 Specific objectives

i. To know the service provided by NGO and poverty reduction tools of NGOs.
ii. To know loan repayment performance of NGOs.
iii. To know the current poverty situation in Bangladesh

1.3 Research Questions

i. What is the significant difference between microfinance and poverty reduction?

ii. Who are benefiting from microfinance services?
iii. What gender issues are involved in microfinance operations?
iv. What is the difference between loan repayment and poverty reduction?

1.4 Research Hypothesis

The aim of the study is to find evidence to examine the hypothesis below-

H0: There are no significant differences between performances of NGOs in poverty alleviation
in Bangladesh.

H1: There are significant differences between performances of NGOs in poverty alleviation in
Bangladesh.

Page | 3
 1.5 Research Methodology

 Study area

NGOs of Bangladesh will be considered as the study area.

 Research Type
This report will be an explanatory research. Different statistical tools will be used in analysis and
presentation of data through the report.

 Research Population
Top 24 (Twenty-Four) NGOs will be included as the study population.

 Sampling Methods

8(Eight) Non-governmental Organization out of total population will be considered as sample for
the study.

 Sources of Data

Most of the data will be collected from secondary sources. This are-

 Annual Report of these NGOs.

 Websites
 Various articles and journals.

 Data Analysis Plan

Collected data will be analyzed by using statistical tools (Mean, Standard Deviation, correlation,
regression analysis) through Eviews statistical software.

1.6 Limitation of the Study

The major limitation of this study is data gap. Because of the Novel Corona virus field survey
couldn't possible, secondary data and experience have been mostly relied on. So, I can't provide
intensive research into the subject matter.

Page | 4
 Chapter: 02
Literature Review

Page | 5
 2.1 Literature Review

In this section a review of literature on multiple aspects of microfinance programs has been made.
It is redundant to mention that micro-credit helps the poor in day-to-day household-level
consumption of basic necessities as well as in asset building. It also helps to promote investment
in human capital like schooling. It raises awareness to reproductive health and increases both
individual and household welfare especially to extreme poor.

Microcredit programs have also, in many cases, increased mobility and strengthened networks
among women who were formerly restricted to go outside the home (Carr et al. 1996).
Borrowers build solidarity via their engagement in lending circles and village organizations. This
communication is especially important in Bangladesh, for example, where women’s mobility is
confined, and weekly meetings can be an opportunity for women to meet outside the home and
discuss their difficulties. There are a lot of cases which indicate even more far-reaching social
impact, including reduces in fertility rates, assumed to be linked to raised financial self-reliance
and more say for women in family matters, including family finances (Hashemi 1996).

In some events, the impact on the poorest may in fact be opposite. Paul Mosley and David
Hulme 1996, surveyed successful microcredit programs in seven different countries. In all
microcredit programs, they found that average earnings of borrowers increased gradually. They
also revealed that, the wealthier the borrower, the higher the income increases derived from
credit. However, borrowers below the poverty line basically lower incomes than before joining
the programs, i.e., the poor actually became poorer through microcredit. The reasons for this are
not clear.

According to Mosley and Hulme 1996, the poor may use the loans differently, for consumption
or to invest in lower risk (and generally less remunerative) activities. Meanwhile, the better-off
borrowers tend to invest in riskier and more productive ventures, including technological
improvements. The study concluded that “while credit may be an effective medium for boosting
the incomes of the poor, it may be less effective, or even counter-productive, in helping the
poorest of the poor raise their living standards.

As the rescuer of large number of people without food, cloth, education and basic health
facilities the NGOs are working. Bangladesh is one of the underprivileged countries with the
record of being the most densely inhabited country on earth and feeble workforce ability. In
where, Bangladesh NGOs can continue playing the role of catalyst in the attainment of
sustainable economic growth and development and can work for reducing poverty those are poor.
They can act as helping hand with government for benefiting people and reducing poverty
through several activities and programs.

Page | 6
According to Begum, A. (2003) that some of the banks provide microcredit to the poor without
any collateral to generate employment, income and self-esteem. The process that takes places in
the Grameen Bank is better characterized as organizational development for people's direct
participation in economic activities. Other hand has some banks also played this kind of roles.
Based on those issues the major’s areas in which Bangladeshi NGOs are presently involved
include relief and rehabilitation; rural development; education; health and family planning;
micro-credit; infrastructure development; employment generation; development programmers’
sustainable development; and research and communication.

Advancement Committee (BRAC), found that microcredit alleviated poverty up to 5 percent

annually. Furthermore, it was found that a loan of Tk. 100.00 to a female borrower, after it is
repaid, allows a net consumption increase of Tk. 18.00. For Thailand village banks, Coleman
(1997), using the same approach as that of Khandker (1995), found no evidence of any impact of
micro finance.

Another study by Coleman (1997), found that programs are not reaching the poor as much as
they reach relatively wealthy people. Khandker (1995), found that microfinance helps to reduce
extreme poverty much more than moderate poverty, i.e., 18 percentage points as compared with
8.5 percentage points over seven years. Welfare impact is also positive for all households,
including nonparticipants, as there were spillover effects. Mosley (1996), using data from Latin
American countries, found a positive growth of income and assets of the borrowers than control
group.

Bangladesh Government and Non-Government Organization (NGO) always try to lessen the
poverty. Many NGOs are providing microcredit to the poor people and they argued that poverty
is alleviating day by day by taking microcredit and other lucrative facilities (Hashemi et al 1996),
(Bhattacharya, et al. 1996), (Hossain, M.,1988), (Khandker, S. R., 1998), (Yunus, M., 1999).

Page | 7
Chapter: 03
Overview

Page | 8
 3.1 Concept of Poverty
Poverty is a condition in which a person or community lacks a socially acceptable amount of
money or material possessions and essentials for a minimum standard of living. Poverty is said to
exist when people lack the means to satisfy their basic needs such as food, clothing and shelter.

Types of Poverty
 Absolute poverty: When people lack basic food, clean water, health, shelter, education and
information that condition is called absolute or extreme poverty.

 Relative Poverty: When people lack the least amount of income required to maintain the
normal standard of living in the society to which they belong is called relative poverty.

 Situational Poverty: It is a temporary type of poverty which occurs due to an adverse

event like environmental disaster, job loss and severe health problem.

 Generational Poverty: It is a type of poverty which handed over to individual and families
from one generation to another.

 Rural Poverty: It occurs in rural areas where there are less job opportunities, less access
to services, less support for disabilities and quality education opportunities.

 Urban Poverty: It occurs in the metropolitan areas due to inadequate housing and
services, unhealthy environment because of overcrowding and little social protection
mechanism.

Poverty line
Poverty line or threshold is a level of personal or family income below which one is classified as
poor according to government standards. People living below the poverty line don’t have enough
money to meet their basic food, clothing and shelter needs.

Page | 9
 3.2 Current condition of Poverty in Bangladesh

For a nation, poverty is a curse. In our country, the GDP growth rate, industrialization and per
capita income are developing but poverty still exists as the anathema in our country. In rural
areas, both the poverty rate and the percentage of the population are higher than in urban areas.
In terms of poverty reduction, Bangladesh is a model country. Incredible progress has been
achieved in reducing poverty, reinforced by constant economic growth. Bangladesh has more
than condensed the incidence of poverty over the last 20 years.

Poverty exists in Bangladesh at a lower rate compared to before. The percentage of poverty has
gradually reducing day by day through various activities.

According to Bangladesh Bureau of Statistics (BBS), the poverty rate and extreme poverty rate
are decreased by 1.3% and 0.8% consecutively in 2019.Now, 20.05% people of Bangladesh are
under poverty line from their 10.5% people are under absolute poverty line who are deprived of
their basic human needs. The average poverty reduction rate has been calculated from the data to
be revealed through a flagship of BBS (Bangladesh Bureau of Statistics).

While the economy has rapidly improved, poverty still remains for many in Bangladesh. With
further prosperity and a focus on education and a diversified economy, poverty in Bangladesh
continues to decline.

Page | 10
 3.3 Causes of Poverty in Bangladesh

 Inadequate access of clean water and nutritious food.

 Lack of employment opportunity.
 Inequality.
 Poor education system.
 Natural disaster.
 Lack of infrastructure.
 Huge population.
 Violence.
 Political conflicts.
 Limited Government capacity.
 Corruption.
 Lack of researcher and research.
 Lack of entrepreneur.
 Poor financial system.
 Foreign pressure.
 Lack of trainings and skill development programs.

Page | 11
 3.4 NGO

Non-government organizations (NGO) are the private institutions, viewed as nonprofit

organization, which are working for social development and mainly for poverty alleviation.

3.5 Role of NGOs in Poverty reduction and Social development

 Provide collateral free loan facilities.

 Provide formal and non-formal education.
 Health care facilities.
 Developing agriculture and provide guideline to farmer.
 Creation of employment.
 Women empowerment and ensure gender equity.
 Raising fund through deposit collections.
 Increasing living standard of poor.
 Ensure access of food and water.
 Provide training and skill development.

Page | 12
 Chapter: 04
Financial Performance

Page | 13
 4.1 Financial Performance

In this table we show the 5 years average financial performance of selected 8 NGOs:

(Amount in million BDT)

Year Loan Savings Asset Recovery Surplus Net
to customer of customer income
2014 309391 194,077 524808 301210 24558 100308

2015 387481 230,651 617163 380815 30794 114323

2016 487684 272,151 711995 477550 39004 130073

2017 567044 314,209 823014 555996 44702 152227

2018 650235 355,504 969825 640269 43228 173455

Page | 14
 4.2 Graphical presentation of performance

700000
650235
640269
567044
600000
555996
487684
500000 477550

387481
400000 380815
309391

301210
Loan to Customers
300000 Loan Recovery

200000

100000

0
2014 2015 2016 2017 2018

Savings of customer(amount in million)

400,000 355,504
350,000 314,209
300,000 272,151
250,000 230,651
194,077
200,000
savings of customer
150,000
100,000
50,000
0
2014 2015 2016 2017 2018

Page | 15
 Total Asset (amount in million)

1200000
969825
1000000
823014
800000 711995
617163
600000 524808
asset
400000

200000

0
2014 2015 2016 2017 2018

Surplus(amount in million)
50000
44702 43228
45000
39004
40000
35000 30794
30000
24558
25000
20000 surplus
15000
10000
5000
0
2014 2015 2016 2017 2018

Page | 16
 Net income(amount in million)
200000
173455
152227
150000 130073
114323
100308
100000
net income
50000

0
2014 2015 2016 2017 2018

Borrower(amount in million)
7
6.23
6 5.49
4.86
5
4.1
4 3.4
3 Borrower

0
2014 2015 2016 2017 2018

Page | 17
Page | 18
 Chapter: 05
Statistical Analysis

Page | 19
 5.1 Descriptive Statistics

Descriptive statistics are brief descriptive coefficients that summarize a given data set, which can
be either a representation of the entire or a sample of a population. Descriptive statistics are
broken down into measures of central tendency and measures of variability (spread). Measures of
central tendency include the mean, median and mode, while measures of variability include
standard deviation, variance, minimum and maximum variables, and kurtosis and skewness.

 Mean
Mean measures the average value of the data series.

 Median
Median is the middle value of the series when the values are ordered from the smallest to the
largest.

 Maximum and Minimum

This shows the maximum and minimum values of the series in the current sample.

 Standard Deviation
This is the measure of dispersion or spread in the series.

 Skewness
It measures the asymmetry of the distribution of the series around its mean.

 Kurtosis
This measures the peakedness or flatness of the distribution of the series.

 Jarque-Bera
This is a test statistic for testing whether the series is normally distributed.

Page | 20
 5.2 Regression Analysis

Regression analysis is a statistical method used for the elimination of a relationship between a
dependent variable and an independent variable. It is useful in accessing the strength of the
relationship between variables. It also helps in modeling the future relationship between the
variables. It is a reliable method of identifying which variables have impact on a topic of interest.
The process of performing a regression allows you to confidently determine which factors matter
most, which factors can be ignored, and how these factors influence each other.

Regression Equation:

Regression analysis includes several variations, such as linear, multiple linear, and nonlinear.
The most common models are simple linear and multiple linear. Nonlinear regression analysis is
commonly used for more complicated data sets in which the dependent and independent
variables show a nonlinear relationship.

Simple linear regression

A simple linear regression model attempts to explain the relationship between two or more
variables using a straight line. The simple linear model is expressed using the following equation:

Y = a + bX + ϵ
Where:
Y – Dependent variable
X – Independent (explanatory) variable
a – Intercept
b – Slope
ϵ– Residual (error)

Page | 21
Multiple linear regression

The multiple linear regression is used to explain the relationship between one continuous
dependent variable and two or more independent variables. The mathematical representation of
multiple linear regression is:

Y = a + 𝜷𝟏𝒙𝟏 + 𝜷𝟐𝒙𝟐 + 𝜷𝟑𝒙𝟑+ ϵ

Where:
Y – Dependent variable
𝒙𝟏, – Independent (explanatory) variables
a – Intercept
𝜷𝟏,𝜷𝟑– Slopes
ϵ– Residual (error)

Multiple linear regression follows the same conditions as the simple linear model. However,
since there are several independent variables in multiple linear analysis, there is another
mandatory condition for the model:

 Least Squares Method

The least-squares is a standard method in regression analysis which provides the closest
relationship between the dependent and independent variables by minimizing the distance
between the residuals and the line of best fit i.e. the sum of squares of residuals is minimal under
this approach.

 T-Statistic

The t statistic is used to determine whether two means are statistically different. The formula
uses the means of the two samples, their standard deviation and sample size. The higher the t-
value, the greater the confidence placed against the null hypothesis. This means there is greater
evidence that there is a significant difference.

 P value
The P-value is known as the probability value. It is defined as the probability of getting a result
that is either the same or more extreme than the actual observations. The P-value is known as the
level of marginal significance within the hypothesis testing that represents the probability of
occurrence of the given event. The P-value is used as an alternative to the rejection point to
provide the least significance at which the null hypothesis would be rejected. If the P-value is
small, then there is stronger evidence in favor of the alternative hypothesis.

Page | 22
  A p value less than 0.05 indicates rejection of null hypothesis.
 A p value larger than 0.05 indicates rejection of alternative hypothesis.
 A p value very close to 0.05 indicates rejection or acceptance of both hypotheses.

 R-squared
For determining how well linear regression model fits the data, we should measure R-squared.
R-Squared is a statistical measure in a regression model that determines the proportion of
variance in the dependent variable that can be explained by the independent variable. In other
words, r-squared shows how well the data fit the regression model (the goodness of fit). Whereas
correlation explains the strength of the relationship between an independent and dependent
variable, R-squared explains to what extent the variance of one variable explains the variance of
the second variable.

 Adjusted 𝑹𝟐
Adjusted R 2 also indicates how well terms fit a curve or line, but adjusts for the number of
terms in a model. If you add more and more useless variables to a model, adjusted r-squared will
decrease. If you add more useful variables, adjusted r-squared will increase. Adjusted R2 will
always be less than or equal to R2.

Page | 23
 5.3 Analysis No. - 1

Before regression analysis, we analyze descriptive statistics because they provide summary of
given data set which can be either a representation of the entire or a sample of a population.

ASSET_SURPL ASSET_TURN LOAN_RECOV LOAN_SAVIN

US OVER ERY GS
Mean 0.050072 0.202987 0.980153 0.576288
Median 0.049896 0.185240 0.980517 0.558048
Maximum 0.054781 0.270910 0.984673 0.627287
Minimum 0.044573 0.182688 0.973558 0.546732
Std. Dev. 0.004505 0.038098 0.004240 0.034127
Skewness -0.063140 1.475379 -0.648064 0.679894
Kurtosis 1.399905 3.215667 2.280302 1.845322

Jarque-Bera 0.536719 1.823642 0.457898 0.662981

Probability 0.764633 0.401792 0.795369 0.717853

Sum 0.250360 1.014933 4.900764 2.881442

Sum Sq. Dev. 8.12E-05 0.005806 7.19E-05 0.004659

Observations 5 5 5 5

Interpretation

On the above analysis, asset to surplus and loan to negatively skewed on the other hand loan to
savings and asset turnover are positively skewed. Whereas, three variable such as loan to savings,
loan to recovery and Asset surplus are flat or platykurtic (less than 3) relative to normal and asset
turnover is peaked or leptokurtic (higher than 3) relative to normal.

Page | 24
 5.4 Analysis No. - 2

For executing regression analysis of performance of NGOs in poverty reduction in Bangladesh,

we use multiple linear regression models. We consider Asset to surplus as dependent variable (Y)
and loan to savings, loan to recovery and asset turnover as independent variable (𝒙𝟏,,)
consecutively. In this part, I tried to show the p value, t statics,2, Adjusted 𝑅2 of the variables.

To achieve the objective of the report, the following model is used for the regression:
Y (Asset to Surplus) = a + (loan to recovery) + (loan to savings) + 𝜷𝟑(asset turnover)

Based on the above model, a regression test was run with data and the outcome obtained is-

Dependent Variable: ASSET_SURPLUS

Method: Least Squares
Sample: 2014 2018
Included observations: 5

Variable Coefficient Std. Error t-Statistic Prob.

Asset turnover -0.119716 0.005155 -23.22306 0.0274

Loan to Recovery -0.116378 0.059703 -1.949261 0.3018
Loan to Savings -0.106599 0.006862 -15.53429 0.0409
C 0.249872 0.060724 4.114864 0.1518

R-squared 0.998664
Adjusted R-squared 0.994655
S.E. of regression 0.000329
Sum squared resid 1.08E-07
Log likelihood 37.02029
F-statistic 249.1201
Prob(F-statistic) 0.046533

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Interpretation

R-squared value (0. 998664) of the regression model indicates that 99.87% of the total variation
in asset to turnover can be explained by the three independent variables such as loan to savings,
loan to recovery and asset turnover. The rest 0.0013% variation in asset to surplus can be
explained by residuals or other variables. So, the model is very good fitted to explain the
relationship between the variables.

Now, we talk about t-test so that we can test whether the independent variables are individually
significant or not. The P value of loan to savings and asset turnover are consecutively 4.09% and
2.74% which are less than 5% so it is statistically significant independent variable to influence
our dependent variable asset to surplus. But the p value of loan to recovery (30.18%) is higher
than 5% therefore it is not significant to influence dependent variable. Among the three-
independent variable, two are significant that is not a good sign for the model.

On the other hand, overall P-value for the F-statistic is 4.65% which is lower than the significant
level 5% (0.05). That means, we can reject null hypothesis. The independent variables jointly
influence the dependent variable. So, the relationship between the dependent variable asset to
surplus and the independent variables loan to savings, loan to recovery and asset turnover as a
group is significant.

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 5.5 Analysis No. - 3

The hypothesis for the second analysis is:

𝐻0: Variance of the residuals is homoscedastic.

𝐻1: Variance of the residuals is heteroscedastic.

For this test, we run Breusch-Pegan-Godfrey Test on Eviews 11 software and the output obtained
is-

Heteroskedasticity Test: Breusch-Pagan-Godfrey

Null hypothesis: Homoskedasticity

F-statistic 53.94792 Prob. F(3,1) 0.0997

Obs*R-squared 4.969296 Prob. Chi-Square(3) 0.1741

Test Equation:
Dependent Variable: RESID^2
Method: Least Squares
Sample: 2014 2018
Included observations: 5

Variable Coefficient Std. Error t-Statistic Prob.

C 4.44E-06 8.37E-07 5.296805 0.1188

ASSET_TURNOVER -5.12E-07 7.11E-08 -7.195770 0.0879
LOAN_RECOVERY -3.79E-06 8.23E-07 -4.607290 0.1361
LOAN_SAVINGS -1.03E-06 9.46E-08 -10.85567 0.0585

R-squared 0.993859
Adjusted R-squared 0.975437
S.E. of regression 4.54E-09
Sum squared resid 2.06E-17
Log likelihood 92.97840
F-statistic 53.94792
Prob(F-statistic) 0.099673

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Interpretation

Heteroskedasticity is a statistical term used to describe the behavior of a sample’s variance and
standard deviation. If the quality is present, then the variance and standard deviation of the
variable are not constant over the entire graph of the sample data. If these measures are constant,
then the data is said to be homoskedastic.

Here the observed 𝑅2 is 4.969296and corresponding p value is 17.41% which is much higher
than 5%. Therefore, we do not reject null hypothesis that says the residuals are homoscedastic
not heteroscedastic. This is a good sign for a model.

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 5.6 Analysis No. - 4

The hypothesis for the fourth analysis is:

𝐻0: Residuals follow normal distribution.
𝐻1: Residuals are not normally distributed.

For this test, we run JarqueBera Test on eviews 11 software and the output obtained is-

3
Series: Residuals
Sample 2014 2018
Observations 5

2
Mean 3.40e-17
Median 7.90e-06
Maximum 0.000226
Minimum -0.000236
1 Std. Dev. 0.000165
Skewness -0.093609
Kurtosis 2.426948

0 Jarque-Bera 0.075717
-0.0002 0.0000 0.0002 Probability 0.962849

Interpretation:
The value of Jarque-Bera Test is 7.57% and corresponding P value is 96.28% which is higher
than 5%. So, we cannot reject null hypothesis and therefore the residuals are normally distributed.

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 Chapter: 06
Findings, Recommendations&
Conclusion

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 6.1 Findings

Based on financial performance

After reviewing the whole study, I realize that NGOs play effecting role in poverty alleviation.

 Microcredit loan to the poor are increasing every year which is considered as main
poverty reduction tools of NGOs.
 Borrower of microcredit are raised by 0.64 million in 2018 from previous year that
indicate poor people are benefited from NGOs and have faith on them for changing their
fate.
 Recovery rate of loan is almost 99% that is more than satisfactory indicates that poor are
utilize loan amount successfully and are able to repay it.
 Amount of deposit are also increasing by the underprivileged people that indicates they
are now capable of save their extra for the future which is excellent indication of poverty
reduction.
 The amount of expenditure by NGOs are expanding which amount are using for poverty
reduction activities like schooling, health care and social development etc.
 Most of NGOs members are women that mean they are working for women
empowerment and making women capable to earn. It helps to economic development and
reduces inequality.

Based on Statistical analysis

 The value of R- square is 99.98% which is higher that 60% that indicate that we can
explain variance of dependent variable by independent variables.
 The p value is 4.65% which is less than 5% that means variables are jointly significant.
So, we can reject null hypothesis.
 Two independents are individually significant.
 The residuals are homoscedastic not heteroscedastic that means we cannot reject null
hypothesis.
 Value of Jarque-Bera Test is 7.57% and corresponding P value is 96.28% which is higher
than 5%. That means residuals are normally distributed.

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 6.2 Recommendations

For poverty reduction in Bangladesh the following recommendation should be considered by

NGOs: -
 The rate of interest should be reduced because that will motivate poor people to take loan.
 NGOs should clear the fact of how much poverty they are reducing.
 Male members should be invited side by side female ones.
 The poor people should be motivated to self employed.
 NGOs should invest more money in education and health sector.
 The loan payment system should be more convenient to the poor.
 The person who is unable to repay loan should be given some concession.
 New sector should be created so that poor can invest their money.
 NGOs should provide more training programs for entrepreneur development.
 NGOs should find out actual grass root level people and motivate them to take loan.

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 6.3 Conclusion

Microfinance has become a very accepted and popularly used tool to eradicate poverty in
developing countries like Bangladesh by NGOs. In Bangladesh, the living standard of many
people is lying below poverty level. Poverty is a major considerable threat to vulnerable people
as they hardly carried out their daily basic needs. NGOs are working actively in alleviating
poverty and solving unemployment problems from the rural areas through their different services
like micro-credit, provision of domestic animals, insurance, housing loan, education loan,
provision of scholarship for poor and meritorious students etc.

NGOs are also influencing significantly in removing different social superstitions and problems
like eve teasing, early marriage, education of girls etc. through various awareness build up
campaigns. But it is also true that such activities have less admissibility among rural people due
to unpleasant experience with the employees of different NGOs. So, it can be said doubtlessly
that NGOs play an important role in eradicating poverty with given emphasis on rural agriculture
development and food security. They also contribute in mobilizing youth power and establishing
gender equality by engaging women in the development process. But their contribution is
temporal as they don't have any influence in creating employment opportunities which might be
required to eradicate poverty in the long run. Therefore, NGOs should focus on co-operative
activities to overcome their shortcomings.

This study illustrates that micro finance has a great impact on poverty reduction. The borrower
should use properly the obtained loan and the microfinance institutions also should have
appropriate policy and implication to have a role more on poverty reduction.

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 References

Articles and publications:

 Carr, M, Martha C and Renana J (1996). Speaking Out: Women’s Economic

Empowerment in South Asia,London: IT Publications, 1996.
 Hossain, M.,1988. Credit for Alleviation of Rural Poverty: The Grameen Bank in
Bangladesh, Research Report, 65, IFPRI, Washington, D.C.
 Khandker, S. R., 1998. Micro-credit Program Evaluation: A Critical Review, IDS
Bulletin 29(4), 11-20.
 Yunus, M., 1999.Banker to the Poor, The Autobiography of Muhammad Yunus, Founder
of the Grameen Bank. Aurum press limited. London.
 Begum, A. (2003). Government-NGO interface in development management:
Experiences of selected collaboration models in Bangladesh. AH Development
Publishing House.
 Al Mamun, C.A., Hasan, M.N. and Rana, A., 2013. Micro-credit and poverty alleviation:
The Case of Bangladesh. World, 3(1).
 Husain, J., 2008. Role of micro-finance institutions in reducing world poverty: an
overview. The Business Review, 11(1), pp.37-52.
 Khandker, S.R., 2005. Microfinance and poverty: Evidence using panel data from
Bangladesh. The World Bank Economic Review, 19(2), pp.263-286.

Websites

 www.assignmentpoint.com
 www.Investopedia.com
 www.Statista.com
 www.eviews.com
 www.slideshare.com
 www.wikipedia.com

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