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An Enquiry into the Nature and Determinants of Polarisation in Personal Wealth : A Case Study Using Handloom Industry Data

Nuimuddin Chowdhury

 

Abstract

It is usually recognised that one of the important determinants of the inequality of the distribution of incomes relates to the distribution of wealth. Not much systematic work appears to have been done about the level and determinants of transactions in wealth in Bangladesh agriculture. This paper seeks to fill this lacuna, in part, and focusses on the levels, structure and determinants of the flows of wealth in relation to a sample of handloom entrepreneurs. We argue (a) that wealth transactions by respondents who are selling in net terms represent attempts not so much optimise wealth portfolio as to tide over liquidity contingencies stemming from an unforeseen depression in current incomes; (b) that net sales and net purchases of wealth items are largely accounted for by the handloom respondents in the small and large size-classes, respectively; (c) that land and homestead account for the major proportion of the sales and purchases of assets; and (d) finally that favourable access to liquidity, represented by whether one has a running credit limit with a commercial bank, and one’s situation on the informational network, as represented by whether one happens to be a dealer in yarn as well as a manufacturer of cloth explain a considerable proportion of the observed variance. The income variable, whenever it was tried, was found to be less effective than either of these dichotomous variables in explaining the variance. The moral seems to be that access to information and sizeable liquidity represent a combination more potent, from the viewpoint of making feasible attractive purchases of assets, than merely one’s own high income.

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