Early findings from a study of influences on financial decision-making in a chronically poor rural area of Bangladesh

This paper reports on early findings from a study of the influences on financial decisionmaking in a chronically poor rural area of Bangladesh. Findings indicate that financial decisions to take up microfinance loans from NGO’s are the result of significant financial pressures and are done so for income smoothing purposes, rather than for investment in new income streams. The households who utilise microloans for purposes other than new entrepreneurial ventures are experiencing escalating “debt spirals” which gives rise to increased financial vulnerability. These findings raise questions about the sustainability of microloans as a means of poverty alleviation