Microfinance and Debt Trap: An Ethnographic Evidence From a Village in Bangladesh

Md Akther Uddin, S. M. Sohrab Uddin

Source Title: International Journal of Asian Business and Information Management (IJABIM)12(3)

ISSN: 1947-9638|EISSN: 1947-9646|EISBN13: 9781799861065|DOI: 10.4018/IJABIM.20210701.oa24

MLA

Uddin, Md Akther, and S. M. Sohrab Uddin. "Microfinance and Debt Trap: An Ethnographic Evidence From a Village in Bangladesh." IJABIM vol.12, no.3 2021: pp.1-11. http://doi.org/10.4018/IJABIM.20210701.oa24

APA

Uddin, M. A. & Uddin, S. M. (2021). Microfinance and Debt Trap: An Ethnographic Evidence From a Village in Bangladesh. International Journal of Asian Business and Information Management (IJABIM), 12(3), 1-11. http://doi.org/10.4018/IJABIM.20210701.oa24

Chicago

Uddin, Md Akther, and S. M. Sohrab Uddin. "Microfinance and Debt Trap: An Ethnographic Evidence From a Village in Bangladesh," International Journal of Asian Business and Information Management (IJABIM) 12, no.3: 1-11. http://doi.org/10.4018/IJABIM.20210701.oa24

Export Reference

Favorite Full-Issue Download

View Full Text HTML

View Full Text PDF

Abstract

This paper studies microfinance and debt trap nexus. We have used an ethnographic approach, unstructured observation and interviews, to develop scenarios with the help of which we try to explain the phenomenon. Our research was carried out in DipKalaMoral, a small village located in Shikalbaha union under Karnaphuli Upazila of Chittagong in Bangladesh. We have found that excessive leverage through multiple borrowing lead to debt trap when households face unexpected income shocks due to economic cycle, unexpected weather (like heavy monsoon), wedding expenditure or paying dowry, and unexpected healthcare expenditure. In addition to that, we have found that informal money lenders tend to exploit households when households are heavily leveraged. Interestingly, we have identified a new phenomenon, ‘borrowing for others’ when households borrow from Micro Finance Institutions (MFIs) to lend money to others. A number of policy measures have been recommended which could be beneficial for policy makers and MFIs.