The people in Bangladesh have no access to formal lending institutions. Consequently, they borrow from non government organizations (NGOs) where they do not need to show any collateral and for different reasons they borrow from more than one NGO. This study examines the impact of multiple borrowing on living standard of the borrowers and tries to find out the determinants of borrowers’ income. Result shows that there is no significant difference in gross income between the groups of borrowers borrowing from single source and borrowing from multiple sources. But, in case of living expenses, savings and amount of non-land assets, there is significant difference between the groups. Borrowers who borrow from single source can spend more for quality life than those who borrow from multiple sources. Since the borrowers who borrow from multiple sources are to pay a larger amount of their income in their installments and they are to bear larger transaction cost, they can save less in spite of making less expense on quality of life. The borrowers borrowing from single source have significantly higher amount of savings and non-land assets than those who borrow from multiple sources. Policy makers should make policies in a way so that that the borrowers can get sufficient amount of loan from one source and they are encouraged to avoid loan from multiple sources which impose higher level of loan transaction costs & repayment burden.
Md. Shahidul Islam,
Multiple Borrowing and Living Standard: A Study in Bangladesh, International Journal of Economic Behavior and Organization.
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