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Loan Choice and Indebtedness of Bangladeshi Return Migrants

Author

Listed:
  • Amer Ahmed

    (The World Bank)

  • Esther Bartl

    (Department of Economics(PHD), University of Sussex, Falmer BN19RH , The World Bank)

Abstract

Bangladeshi migrant workers face extremely high migrations costs, and often finance their migration episodes by incurring substantial debt. These costs have been found to be associated with persistent indebtedness, even after return. Individuals from poorer households have been found to prefer loans provided by a bank or money lender. At the same time, older individuals who not qualify for formal loans prefer borrowing from family and friends. The size of migration costs and time since return are major determinants of loan repayment. A one percentage point increase in migration costs may reduce the likelihood for full loan repayment by 12.9 percentage points. Early return may reduce the probability of full loan repayment by 7.32 percentage points compared to planned return. Presence of collateral may reduce the already repaid loan amount by around 30 percentage points, but implies that indebted households are putting their productive assets at risk

Suggested Citation

  • Amer Ahmed & Esther Bartl, 2024. "Loan Choice and Indebtedness of Bangladeshi Return Migrants," Working Paper Series 0824, Department of Economics, University of Sussex Business School.
    • Handle: RePEc:sus:susewp:0824
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    References listed on IDEAS

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    More about this item

    Keywords

    labor migration; migration cost; migration loan; Bangladesh;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance

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