Pitfalls of Microcredit towards Sustainable Economic Development of the Microcredit Borrowers Evidence from Rupsha, a Locality of Bangladesh

Idris Ali et al.

Abstract


This paper endeavors to investigate the pitfalls of microcredit towards sustainable economic development in a specific area of Bangladesh. The study obtained the opinions of 50 families from Rupsha, a locality of Bangladesh through a survey on the pitfalls of Microcredit to ensure sustainable development of the borrowers. To conduct this study, qualitative (expert interview, focus group discussion) and quantitative methods was used. The study is based on primary data collection through semi-structured questionnaires and Statistical Package for Social Science (SPSS) was used to analyze the data. The study finds that microcredit institutions charge high interest rate, do not monitor the usage of loan, fail to select right borrowers, do not provide any training to the borrower on effective utilization of loan, frequently loans are used in unproductive sector, short repayment period, gap between the installments is too short, these mentioned pitfalls prevent sustainable economic development of the borrowers. Although in short-term, microcredit plays a significant role to support the borrowers but in long-term it creates burden of loan repayment with high interest rate who fails to use loan properly. Study also finds that microcredit contributes a few borrowers to achieve sustainable development who could utilize the loan properly. Finally, this study comes up with some recommendations to get more benefit from microcredit to ensure sustainable development of the borrowers. Nevertheless, the results of the study are constrained by the size of the sample, area and robustness of the analysis.

Keywords


Pitfalls, Microcredit, Sustainable Development

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