Assoc. Prof. Abu S. Shonchoy

Seasonality and Microcredit

This is the title of a book by Abu S. Shonchoy. The mismatch between credit repayments and income seasonality can create serious distortions. However, typically Micro-Finance Institutes (MFIs) do not provide any adjustments due to the income seasonality. For instance in Northern Bangladesh, income and consumption downfalls during the time of post-Aman rice plantation seasons are quite regular phenomenon which is locally known as “Monga.” Poor landless agricultural wage laborers suffer the most due to this seasonality and usually they face difficulty to smooth their consumptions. As a result, it is extremely difficult to arrange the regular weekly loan repayments of the micro-credit, which they have taken during the productive part of the year. Using field experiments through RCTs in Northern Bangladesh, the study randomly assigned seasonality adjusted flexible micro-credits and traditional rigid micro-credit to different borrowing groups. Examining the repayment behavior of the borrowers in the context of geographical classifications and loan designs; employing both survey and experimental methods, this study allows us to see the consequences of flexible loan repayment rules during the lean periods, and how they affect both MFIs and participating borrowers. The findings of this study have important policy implications for MFIs and policy-makers of the developing countries.

Mr. Shonchoy is an applied economist with an interest in issues of global development. He has a wide range of experience in conducting field research and experiments in South Asia and West Africa. He has been engaged in more than 10 RCTs in the field of infrastructure, financial inclusion, labor market, and education in developing countries. His papers have appeared in peer-reviewed international journals such as the Journal of Development Economics, American Economic Journal: Applied Economics, World Bank Economic Review, Journal of Development Studies, World Development, Contemporary Economic Policy, and IZA Journal of Labor and Development, to name a few.

Abu S. Shonchoy is currently an Associate Professor of Economics at Florida International University (FIU). Before this, he was a visiting scholar at New York University and was working as a tenured research fellow at the Institute of Developing Economies (IDE) JETRO, Japan, as well as, an adjunct assistant professor at the Graduate School of Public Policy (GraSPP) at The University of Tokyo. He is also an IZA Research Fellow.