Loan Choice and Indebtedness of Bangladeshi Return Migrants

Amer Ahmed (sahmed20@worldbank.org) and Esther Bartl
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Amer Ahmed: The World Bank

Working Paper Series from Department of Economics, University of Sussex Business School

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

Keywords: labor migration; migration cost; migration loan; Bangladesh (search for similar items in EconPapers)
JEL-codes: D14 F22 O15 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-ban, nep-mig and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:sus:susewp:0824

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