Microfinance spillovers: A model of competition in informal credit markets with an application to Indian villages

Demont, Timothée

doi:10.1016/j.euroecorev.2016.06.003

Cited by 21 publications

(15 citation statements)

References 28 publications

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“…However, we have not accounted for informal village money lenders, partly because such data is lacking for our period. A recent literature studies the impact of competition between MFIs and money lenders on market outcomes, including interest rates (Mookherjee and Motta, 2016;Demont, 2016). It would be interesting to extend our results in this dimension and examine how the entry decisions of MFIs depends on existing informal money lending.…”

Section: Resultsmentioning

confidence: 82%

Rural transformation, inequality, and the origins of microfinance

Suesse

Wolf²

2020

Journal of Development Economics

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Section: Resultsmentioning

confidence: 82%

Rural transformation, inequality, and the origins of microfinance

Suesse

Wolf²

2020

Journal of Development Economics

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“…En el nivel bajo de ingresos de las firmas, el problema es el escaso acceso a servicios financieros dado su tamaño muy pequeño, a medida que ese tamaño se expande el acceso a financiamiento, por ejemplo, es informal y en menor medida formal, lo que captura esa curva primero decreciente de inclusión financiera, en línea con lo postulado por Demont (2016).…”

Section: Resultsunclassified

Características Económicas De Las Firmas Y Hogares Regionales Del Perú Y Sus Efectos en La Inclusión Financiera 2014-2016

Cruz

2018

TZH

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“…One of the major challenges faced especially by personal loan programs of Microfinance Institutions (MFIs), is that borrowers are highly risky since they are typically low net-worth individuals with little or no collateral that can be acquired by the MFI in the event of default (Kodongo & Kendi, 2013). A popular remedy to this problem involves requiring borrowers to apply for credit in voluntarily formed groups: since such borrowers know each other, safe borrowers will likely form their own groups, avoiding those with higher risk profiles this mitigates the adverse selection problem (Demont, 2013). Group lending model has attracted an enormous amount of public and academic attention mainly after the success of group lending program in Grameenq Bank (Ibtissem & Bouri, 2013).…”

Section: Introductionmentioning

confidence: 99%

Group Lending and Loans Performance in Micro-Finance Institutions in Nairobi City County, Kenya: Case of Kenya Women Microfinance Bank Limited

Abdirashid¹,

Jagongo²

2019

IJCAB

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The microfinance industry has grown over the years. However, there is a growing concern on the loan default among microfinance institutions in Kenya. This may be a pointer to increased ineffectiveness of the institutions’ various lending programs. This study seeks to examine the relationship between group lending and loans performance in micro-finance institutions in Kenya, with a focus on KWFT. The study specifically sought to: determine the relationship between group self-internal regulations among group members and loans performance in KWFT microfinance; to examine the relationship between credit appraisal process of members and loans performance in KWFT microfinance; to establish the relationship between credit policy on group loans and loans performance in KWFT microfinance; and to assess the relationship between credit risk control measures on the group and loans performance in KWFT microfinance. The study was guided by theory of group lending, Asymmetric Information theory and Portfolio Theory. The study adopted a descriptive research design. The target population consisted of approximately 60 respondents in six KWFT branches within Nairobi County. The unit of observation was the credit managers and credit/ loan officers. Since the population was small, a census study was adopted whereby the entire population was considered for the study, thus all the 60 respondents formed the sample size for the study. The study collected primary data though a questionnaire. The developed questionnaire was checked for its validity and reliability through pilot testing. The collected data was analyzed using descriptive and inferential statistics with the help of SPSS software. The descriptive statistics included frequency distribution tables, means, standard deviation and measures of relative frequencies. The inferential statistics entailed a regression analysis which will establish the relationship between variables. The study findings indicate that strong correlation coefficient between loans performance at KWFT and group self-internal regulations, credit appraisal process, credit policy and credit risk control measures and they are all statistically significant. The study concludes that groups financed had put in place mechanisms to ensure that the group members repay loans in time, credit appraisal process employed to inform lending to groups were amount of credit the group qualifies, the ability of the group to repay and the nature of collateral to be imposed, rates charged on the group loans determines the effectiveness of repayment of loans by the members and the period the group is given to repay the loans determines the loan performance. The study recommends that organizations participating on group loans need to ensure that the group are promoting good governance in their leadership and administration, the study recommends that those in charge of loans need to work for stability in the macro-environment to ensure interest rates charged by MFIs remain stable and affordable and the study recommends that micro-finance institutions should put in place a credit risk management team whose mandate will be to establish well defined credit control policy and guidelines.

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Microfinance spillovers: A model of competition in informal credit markets with an application to Indian villages

Cited by 21 publications

References 28 publications

Rural transformation, inequality, and the origins of microfinance

Rural transformation, inequality, and the origins of microfinance

Características Económicas De Las Firmas Y Hogares Regionales Del Perú Y Sus Efectos en La Inclusión Financiera 2014-2016

Group Lending and Loans Performance in Micro-Finance Institutions in Nairobi City County, Kenya: Case of Kenya Women Microfinance Bank Limited

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