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How Does Contract Design Affect the Uptake of Microcredit among the Ultra-poor? Experimental Evidence from the River Islands of Northern Bangladesh

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  • Kazushi Takahashi
  • Abu Shonchoy
  • Seiro Ito
  • Takashi Kurosaki

Abstract

This study examines the demand of microcredit among ultra-poor households in northern Bangladesh. We implemented a field experiment to identify what type of credit is best suited to their demand. We found that the uptake rate by the ultra-poor is the lowest for regular small cash credit, followed by in-kind credit. We also found that the ultra-poor are significantly more likely to join a microcredit programme than the moderately poor if a grace period with longer maturity is attached to a large amount of credit, irrespective of whether the credit is provided in cash or in kind.

Suggested Citation

  • Kazushi Takahashi & Abu Shonchoy & Seiro Ito & Takashi Kurosaki, 2017. "How Does Contract Design Affect the Uptake of Microcredit among the Ultra-poor? Experimental Evidence from the River Islands of Northern Bangladesh," Journal of Development Studies, Taylor & Francis Journals, vol. 53(4), pages 530-547, April.
  • Handle: RePEc:taf:jdevst:v:53:y:2017:i:4:p:530-547
    DOI: 10.1080/00220388.2016.1156092
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    References listed on IDEAS

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