Use of microcredit for household income and consumption smoothing by low income communities. (13th June 2017)

• Record Type: Journal Article
• Authors: Wickramasinghe, Vathsala; Fernando, Dilshan
• Is Part Of: International journal of consumer studies. Volume 41:Number 6(2017)
• Page Start: 647
• Page End: 658
• Publication Date: 2017-06-13
• Subjects: borrowing -- consumption smoothing -- credit -- debt -- income smoothing -- loans -- microcredit -- small instant loans; Consumer education -- Periodicals; Home economics -- Periodicals; 339.486405
• DOI: 10.1111/ijcs.12378
• Languages: English
• ISSNs: 1470-6423

Abstract

Abstract: This paper discusses findings of a study that investigated income, savings and consumption patterns of low income people and critical factors that influence the use of microcredit—a form of small instant loans targeted for low income people—for household income and consumption smoothing. The sample of the study consisted of households from low income communities living in a lower‐middle income country—Sri Lanka. It was found that microcredit borrowers were using the loans for purposes that can be identified as income and consumption smoothing, which is beyond the ideas and intended practice of microcredit. The findings suggest that the consequences of using microcredit for income and consumption smoothing could be costly for households and the society at large.