Nahar, Sharmin and Li, Rebecca Yu and Moral, Iqbal Hossain (2025) Shadows of Finance : Unveiling the Role of Illegal Microfinance in Bangladeshi Entrepreneurship. In: Academy of Management Proceedings :. Academy of Management Proceedings . UNSPECIFIED, Copenhagen.
Full text not available from this repository.Abstract
This study investigates illegal microfinance reliance among Bangladeshi entrepreneurs, drawing on Institutional and Resource Dependence Theories. Using a mixed-methods approach with 25 qualitative interviews and survey data from 360 participants in rural and semi-urban areas, the research reveals that institutional voids—such as bureaucratic inefficiencies and limited formal financial access—and resource scarcity drive reliance on unregulated financial mechanisms. Informal trust networks, defined as social connections providing financial resources outside formal institutions, offer access to capital but reinforce dependency and exploitation through high-interest rates and rigid repayment terms. Rural entrepreneurs are disproportionately affected due to weaker regulatory oversight and limited alternatives. This study extends Institutional and Resource Dependence Theories by illustrating how institutional voids and informal networks jointly create resource dependencies, emphasizing their dual role in fostering entrepreneurship and exploitation. Practical insights emphasize the need for tailored financial inclusion strategies to reduce informal reliance and foster equitable entrepreneurial ecosystems.