In early 2013, as part of research for the CGAP Focus Note "A Microcredit Crisis Averted: The Case of Bangladesh," by Greg Chen and Stuart Rutherford, Rutherford and S. K. Sinha interviewed 43 low-income rural Bangladeshi households. The following are summaries and insights gleaned from these interviews.
We conducted the interviews to get current information on the state of microfinance in Bangladeshi villages and to bring a client-level perspective to the data we were collecting from MFIs and others.
Type of Interview
Each household was interviewed only once, for one to more than three hours. There was no fixed questionnaire, but each interview followed a similar sequence: we talked first about the composition of the household, then about their homes and assets, and then about their income sources. Finally we turned to their financial transactions, and in this part of the interview we tried to understand as much of their “portfolio” as possible (including their use of formal, semi-formal, and informal financial tools), and, where they were using or had used MFIs (as was almost always the case), exactly how microfinance fits into their overall financial lives and whether or how that has changed over time.
Selection of Households
Geographical area: For the purposes of the Focus Note we interviewed rural households in areas with a high density of MFI branches and other areas with moderate MFI coverage. We tried to include a range of other variables we thought might have an important bearing on poor people’s lives, such as the relative proximity to roads, factories, and markets; the proportion of households with remittance income from family members overseas; and the extent to which the MFI head offices regarded the area as well-performing (in terms of repayment rates and profitability).
Individual households: In any given area we drove to neighborhoods at varying distances from local markets and roads, left the car at the side of the road, and walked into the neighborhood. We ignored obviously rich households, but other than that we allowed our choice of individual household to be determined by whoever was at home and willing to talk to us. As we approached each house we did not say that we were researching microfinance: we said that we wanted to ask some questions about how people made their living and managed their economic lives. Where possible (not always the case), we interviewed the male and female heads of household and any available adults of the older and younger generation. All interviews were conducted in Bengali (or Bangla). With two exceptions, we interviewed only one household in each neighborhood: the exceptions came about when we followed up on cases that sounded interesting during the initial interview.
Quality of Data
We recorded what we were told. We used our experience as interviewers to ask testing questions if we felt that what we were hearing was unlikely to be true. Since respondents were mostly talking from recall, they will have misremembered many facts. Because finances are personal they will have glossed over some embarrassing facts. Where documentation was available we consulted it: we saw many MFI passbooks and several insurance receipts, for example. We did not verify statements with the financial service providers. Unless otherwise specified, all currency values are in Bangaldeshi taka. At the time of writing, one U.S. dollar is equivalent to about 78 taka.
Respondent Privacy, Consent, and Reward
During the interview we explained that we were working for an overseas research body that had asked us to find out how people manage and finance their livelihoods. We obtained their oral but not written consent to being interviewed. We promised that although we might use the information in a written report their identity would be kept anonymous. We always asked permission before taking photographs. In the summaries that follow names and locations have been made up. Where the household was obviously very poor, we said at the start that we valued their time and would be happy to reward them for our use of it: in such cases (around half of all interviews) we made a small cash payment. We also brought sweets and other snacks with us into the compound.
Presentation of the Material
This document organizes the interviews according to three themes. The first theme illuminates the experience Bangladeshi clients bring to their use of financial services. Savings is the second theme, which demonstrates that clients are becoming more open to using savings products offered by MFIs, and that these products are getting better overall. The third theme weighs the stress of borrowing with the potential benefits