Abstract
This study aims to elucidate the mismatch between seasonality and the terms of microcredit, and to understand the impact of seasonality-adjusted microcredit. To do this, an RCT based experiment has been employed to evaluate the general claims of NGOs regarding moratoria during times of seasonality-induced hardship. Making use of both survey and experimental methods, the findings of this study will allow us to understand the consequences of flexible loan repayment rules during the lean periods, and how they affect both MFIs and participating borrowers.
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Notes
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PRIME (Programmed Initiatives for Monga Eradication) was introduced in 2006 by PKSF (Palli Karma–Sahayak Foundation), a microcredit wholesaler and umbrella organization in Bangladesh. Under the PRIME scheme, individual nongovernment organizations (NGOs) receive credit facilities that have “flexible” terms, under which these NGOs are free to negotiate the credit amount, repayment schedule, and frequency of meetings with the beneficiary, and impose completely different sets of schemes with various borrowing groups. While this is to some extent ideal for the beneficiaries, it is not easy to evaluate flexibility in terms that improve the accessibility of beneficiaries to microfinance, the performance in IGA, or the livelihoods of their families.
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Nonetheless, RCT studies are not always free from endogeneity bias, as has been shown in a recent study by Barrett and Carter (2010).
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Shonchoy, A.S. (2014). Introduction. In: Shonchoy, A. (eds) Seasonality and Microcredit. SpringerBriefs in Economics. Springer, Tokyo. https://doi.org/10.1007/978-4-431-55010-5_1
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DOI: https://doi.org/10.1007/978-4-431-55010-5_1
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