Sensitivity of Loan Size to Lending Rates Evidence from Ghana’s Microfinance Sector
نویسنده
چکیده
This paper examines the combined effect of interest rates and poverty levels of microfinance clients on loan size. Cross section data on 2,691 clients and non-clients households from Ghana is used to test the hypothesis of loan price inelasticity. Quantile regression and variants of least squares methods that explore endogeneity are employed. We find the expected inverse relationship only for the 20th to 40th quantile range. The semi-elasticity of loan amount responsiveness to a unit change in interest rate is more than proportionate and significant for the poorest group only. Market segmentation based on poverty level is suggested in targeting and sustaining microfinance clients.
منابع مشابه
Social Collateral and Repayment Performance: Evidence from Islamic Micro Finance
I n this study we designed to test the remarkable repayment performance of Akhuwat in Pakistan; the most successful Islamic Microfinance Institution (IMFI), which offers interest-free loans in order to improve the quality of life and alleviate poverty. The model of Akhuwat is based on Muakhaat (brotherhood) and Qard-e-Hasan (offering financial assi...
متن کاملProgressive Lending as a Dynamic Incentive Mechanism in Microfinance Group Lending Programmes: Empirical Evidence from India
Microfinance through joint liability or group lending has received a lot of attention recently from policy makers as well as academicians. It is playing important role in delivering financial services to the ‘socially and economically excluded’ poor, in general, and women, in particular. Grouplending works with various dynamic incentives. One such is the principle of progressive lending which p...
متن کاملObserving choice of loan methods in not-for-profit microfinance using data envelopment analysis
Distributing loan using group lending method is one of the unique features in microfinance, as it utilises peer monitoring and dynamic incentive to lower credit risks in extending collateral-free loan to the poor. However, many microfinance institutions (MFIs) eventually perceive it to be costly and restricting loan growth thereby resorted to individual lending method to enhance profitability. ...
متن کاملDeterminants of Repayment of Loan Beneficiaries of Micro Finance Institutions in Southeast States of Nigeria
The study investigated the loan repayment, its determinants and socio-economic characteristics of microfinance loan beneficiaries in the Southeast states of Nigeria. It was carried out in three states of the five southeast states. Using a multistage sampling technique, a total of 144 loan beneficiaries in the three segments of MFIs, namely; formal (commercial and development banks); semi-formal...
متن کاملMicrofinance in the 21 St Century : How New Lending Methodologies
The literature on microfinance has largely attributed the industry’s success to joint liability and peer monitoring, which are direct results of the group lending methodology. As individual lending has become more common in microfinance, especially in Latin America, we need to revisit the reasons for these successes. This paper uses a dynamic model with endogenously determined repayment incenti...
متن کامل