Applying a Digital Ethnographic Tool Into a Data Triangulation and Trustworthiness of Microfinance Over-Indebtedness Study in Bangladesh During COVID-19

Introduction

Microfinance was a silver bullet in Bangladesh in the 1970s, with the noble purpose of supporting disadvantaged people in leaving poverty by offering a little amount of financial assistance. In the beginning, microfinance functioned like a magic wand to bring about a revolutionary shift in the lives of the poor, and as a result, it gained a lot of popularity around the world. Many international donor groups, philanthropists, and foreign donors support this sector with full financial and technical support to ensure that it runs smoothly in order to achieve the noble goal. However, over time, the microfinance sector has seen a decrease in foreign funding. As a result, microfinance institutions become decrepit in order to cover their running costs. To meet the difficulty of sustainability, many non-governmental organizations and microfinance institutions have deviated from their original objective of serving the poor and have shifted their focus to commercialization and profit.

The movement of the industry toward financial sustainability has resulted in increasing criticism that too many microfinance institutions seem to have little interest in poverty alleviation and are instead focusing on profits (Augsburg & Fouillet, 2013; Cull, Demirgüç-Kunt, & Morduch, 2009). Despite criticism, profit-oriented microfinance organizations continue to expand, and there appears to be little choice but to take a more commercial approach to ensure the economic and institutional viability needed to achieve the scale and developmental influence envisioned by early advocates of public interest microfinance (Schmidt, 2010). The borrowers' precarious situation can also be attributable to the borrowers themselves. MFIs are focused on financial sustainability and profitability on the one hand, but borrowers' incapacity to manage loans is putting them in further problems on the other. As a result, having access to microfinance loans does not ensure financial well-being or a higher quality of life; rather, it might contribute to increased stress and suffering, especially if people do not understand how to use such products (Ling, Wilson, & Shevellar, 2017).

Over-indebtedness is attributed in part to market saturation with a narrow range of credit products and competition among microfinance institutions pushing lenders to make increasingly risky loans and pursue harsh collection practices when the borrowers are unable to pay back. In the first decade of the new century, the collection of loan repayment collapsed in the Indian state of Andhra Pradesh (Chen, Rasmussen, & Reille, 2010). Over-indebtedness can increase financial and social vulnerabilities as borrowers take a new loan to repay old ones or go through extreme measures to make their repayments reducing their consumption of food and selling productive assets. Such measures can lock borrowers into a downward spiral with severe consequences. Schicks (2010) mentioned that the drivers of over-indebtedness may be external, lender-related, or borrower-related. In the case of external factors, adverse shocks to income or expenses can make debt unmanageable.