Are Microcredit Borrowers in Bangladesh Over-indebted ?

Khandker, Shahidur R. ; Faruqee, Rashid ; Samad, Hussain A.

World Bank, Washington, DC

关键词: ACCESS TO CREDIT;    ADVERSE EFFECT;    ADVERSE SHOCKS;    AGRICULTURAL BANKS;    AGRICULTURAL DEVELOPMENT BANKS;   

DOI  :  10.1596/1813-9450-6574
RP-ID  :  WPS6574

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Microcredit programs in Bangladesh haveexperienced spectacular growth in recent years, with agrowing number of borrowers availing credit from multiplemicrocredit agencies. There is a growing concern that ifthere are not sufficient returns to borrowing frommicrofinance institutions (MFIS), some borrowers might betaking loans that they will not be able to repay.Ahousehold may be considered over-indebted, for example, ifits debt liability exceeds 40 percent of its income orassets. Using a long panel of household survey data fromBangladesh, the paper finds that some 26 percent ofmicrocredit borrowers are over-indebted on this measureversus 22 percent of non-microcredit borrowers.Econometricanalysis suggests that both MFI competition and multipleborrowing raise indebtedness. However, repeated borrowing,while it affects short-term liability adversely, does affectthe long-term debt-asset ratio favorably.That is, repeatedborrowing helps increase assets more than debt over time.Microcredit borrowers in Bangladesh are thus not necessarilyover-indebted. But when borrowing is seen as protectionagainst shocks such as floods even at the cost of beingindebted, MFIs may offer micro-insurance schemes tosafeguard borrowers against economic shocks.