We (Guganeshan.M & Suthaharan.P) submitted this abstract to Iconart 2016 conference organised by faculty of Arts of University of Colombo. Our abstract has been approved by editorial committee and presented the research finding at the second day of conference.
Abstract is published in the conference proceeding. Our Presentation Slides can be downloaded here.
Abstract:
Increasing credits to households not only
erode earning potential of the targeted population, but also make them far from
promoting progress resulting in greater poverty, exclusion and dependence.
Globally, there has been much research on excessive credits, which results in
negative impact on economic, livelihood and even psychological aspect of the
borrowers affecting the quality of life. Impact of this is
more harmful among low-income poor households and studies point out
original intention of credit for rural empowerment has diminished over time. Within
last 5 years Indebtedness sharply increased within the Northern Region as the
growth of average debt per family rose from Rs.52, 000 to Rs.194, 000. In
addition, number of financial institution per 100,000 people in North has
double at the same period which is even more than Western province. Easy credit is available for even without any
security to buy anything from consumer durables, motorcycles, and
homes to agricultural equipment. Most importantly excessive loans are obtained
by people for their day-to-day consumption thus, the borrowed money
is hardly being used for any economically viable activity resulting in
difficulty to repay. In this article, we seek to explicate the recent
trend of excessive credit among northern province and the underlying impact
that has created on the livelihoods of rural poor through secondary research
and qualitative focus group discussion. Study also attempts to shed lights on
woman empowerment, new job creation, and livelihood development within the
context of credit growth, which ideally should have been improved those
indicators. This paper highlights the measures need to be taken by policy
makers to protect low income population from debt trap such as the need for
national strategies to improve financial literacy of the citizens through
financial education and appropriate financial consumer protection
measures.
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