Recent Advances in Lending to the Poor with Asymmetric Information

Abstract

HAL is a multidisciplinary open access archive for the deposit and dissemination of scientific research documents, whether they are published or not. The documents may come from teaching and research institutions in France or abroad, or from public or private research centers. L'archive ouverte pluridisciplinaire HAL, est destinée au dépôt et à la diffusion de documents scientifiques de niveau recherche, publiés ou non, émanant des établissements d'enseignement et de recherche français ou étrangers, des laboratoires publics ou privés.

Is There a Trade-off between Financial Performance and Outreach in South Asian Microfinance Institutions?

“…These results are consistent with the view that MFIs adopt specific gender policies in their design of financial products, repayment modalities and operational procedures as well as offer interesting opportunities to provide personalized services and better monitoring that helps them to generate a higher repayment rate . Another reason for higher repayment rate on the small loan without collateral is the frequent repayment schedules that require regular meetings with loan officers, enhancing cooperation and peer monitoring (Galariotis et al, 2011). LNPAR30 increases with increasing number of borrowers as it is positively related to scale of outreach (LNTNBPOP), but it is statistically insignificant across both regression models.…”

Relationship lending in microfinance: How does it impact client dropout?

“…To mitigate these problems, MFIs rely on relationship lending, among other things. Indeed, as argued by Galariotis et al (, page 1379), relationship lending may probably be “the most important financing tool for such opaque borrowers.” MFIs often use a relationship lending technique called “the progressive lending technique” (Hering & Musshoff, ), increasing the credit amount only if the previous loan has been correctly repaid (Armendáriz & Morduch, ). This method acts as a dynamic incentive for clients to repay and thus as a risk mitigation instrument for MFIs (Hering & Musshoff, ).…”

Determining Sustainable Strategies for Directors of Microfinance Banks in Nigeria

“…The microfinancing model as popularised by Mohammad Yunus of Grameen Bank in Bangladesh was an adopted model by directors of microfinance banks based on the uniqueness of the environment. The banking model principally stated the modalities for micro lending to the working poor to achieve maximum co-operation and to make repayment easy for the continuation of the lending process (Galariotis, Villa, & Yusupov, 2011). These micro lending services supported families who originate the small (micro) businesses.…”