Institutional Voids, Capital Markets and Temporary Migration : Evidence from Bangladesh
Limited access to credit due to poorly functioning institutions is a key constraint to business creation. This paper examines the role played by temporary migration in addressing the institutional void of limited access to loans by aspiring entrepr...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/493361644263971771/Institutional-Voids-Capital-Markets-and-Temporary-Migration-Evidence-from-Bangladesh http://hdl.handle.net/10986/36969 |
| Summary: | Limited access to credit due to
poorly functioning institutions is a key constraint to
business creation. This paper examines the role played by
temporary migration in addressing the institutional void of
limited access to loans by aspiring entrepreneurs. Using
rich data from one of the major migrant-sending countries
globally, Bangladesh, it provides evidence on how migration
is employed as a common intermediate step to accumulate the
capital required for entrepreneurship. The paper offers, for
the first time, a detailed account of the financial costs
and returns to temporary migration as a risky investment. It
shows that international migration shares many common
features with classical entrepreneurial investments: it
requires the payment of a considerable upfront cost,
generates high returns, and is risky. The paper shows that
temporary migrants usually get high returns from their
migration episode and are often successful in starting
entrepreneurial activities back home, thanks to faster
accumulation of savings overseas. Given the similarities
shared by Bangladesh and other major migrant-sending
countries globally, the key findings of the paper are
relevant beyond the Bangladeshi context studied by this paper. |
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