Informal businesses and micro-credit - evidence from financial diaries: a study in ramanagaram, India

Abstract

Combining quantitative with qualitative data, through a unique methodology of financial diaries, we generate thick descriptions of the informal business involving peddling of vessels and other products in Ramanagaram, Karnataka, India. By dovetailing the cash inflows from the businesses to loan repayments, we show that a standardized microfinance loan is unsuited to their business cash flows. Informal businesses are marked by seasonality and volatility springing from the contextual and socio-demographic circumstances of households running them. A keen understanding of such businesses is imperative for making the informal sector vibrant enough to support the economic lives of the poor.