Does Contingent Repayment in Microfinance Help the Poor During Natural Disasters

Microfinances in Bangladesh introduced a contingent repayment system beginning in 2002, which allowed rescheduling of savings and installments during natural disasters for affected members. This paper is one of the first attempts to evaluate the system employing a unique dataset. In using evidence from a flood in 2004, I find that rescheduling plays the role of a safety net by decreasing the probability that people skip meals during negative shocks by 5.1%. This effect is even higher on the landless and females. This study attempts to contribute to the issue regarding the poverty reduction effect of Microfinances