Research Activities
Research Projects 2025
Formal Financial Market and Informal Lending under Economic Shocks: Experimental Evidence from Rural Bangladesh
Outline
Rural communities in developing countries have been engaged in risk-sharing through informal lending and borrowing when economic shocks such as natural disasters occur.Informal lending with landowners, relatives, and acquaintances is an important risk-sharing strategy in rural developing countries where formal financial access is not available.However, informal lending has higher interest rates than formal microcredit, making them less accessible to poor farmers.
Recently, empirical studies have been conducted to determine whether formal microcredit schemes can reduce informal lending, but no unanimous conclusion has been reached.
In this study, we use data from a randomized controlled trial in Bangladesh to examine whether the expansion of microcredit has affected the increase or decrease in informal lending.
Furthermore, we will determine whether microcredit as a risk-sharing function can still crowd out informal lending even when poor farmers experience economic shocks.
Finally, the heterogeneity of the effects of microcredit access across gender and crops can lead to effective microcredit policies.
Period
April 2024 - March 2026
Members
| Role | Member |
|---|---|
| [ Organizer ] | Matsuura, Masanori |
| [ Co-researcher ] | Narayan Das(BRAC Institute of Governance and Development Senior Research Fellow) |
| [ Co-researcher ] | Abu Hayat Md. Saiful Islam(Bangladesh Agricultural University Professor) |
*Affiliations are as of April 2025.
Expected Outcome
- Paper Submission to Peer-Reviewed Journal