Determinants of Multiple Borrowing Among Micro-credit Clients in Rural Andhra Pradesh
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2012
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Haverford College. Department of Economics
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Award
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eng
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Open Access
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Abstract
Multiple borrowing between micro-credit clients has gathered a significant amount of attention in the light of the recent debt crisis in Andhra Pradesh in 2010. While existing literature mainly explores motivations of clients behind multiple borrowing, this paper examines whether certain household and market characteristics have a significant effect on a household’s likelihood of undertaking multiple borrowing. Our findings show that households that belong to a backward class, and households that exclusively own non-income generating assets such as a television are more likely to engage in multiple borrowing; ownership of a capital good such as a bike and access to a formal savings scheme such as those offered by post offices reduces this likelihood. Lastly competition from informal sources reduces the tendency of a household to undertake multiple borrowing from Joint Liability Groups.