Abstract This paper provides a rationale for one of the most widely practised mechanisms by microfinance institutions (MFIs)—simultaneous borrowing and saving. Unlike existing literature, our explanation does not involve any behavioral aspect. We study dynamic relationship between benevolent MFI borrower who is subject to an ex post moral hazard problem. The optimum contract involves simultaneo...

We find that competition from payday lenders leads depository institutions to raise overdraft fees and reduce the availability of “free” checking accounts. We attribute this rise in prices partly to adverse selection created by banks’ practice of charging a flat fee regardless of the overdraft amount―pricing that favors depositors prone to large overdrafts. Payday credit is priced per dollar bo...

The banking sector is a competitive environment, where business process re-engineering is constantly needed. Business process modelling and automation are effective tools towards this direction, improving the performance of business activities and enabling enterprise-wide monitoring and coordination. In this paper, we present a case study of modelling and automating business processes in the Lo...

This paper exploits a natural experiment to document adverse selection among prime consumer credit borrowers in the US. In our setting, some borrowers are offered only a short term loan while an observationally equivalent set of borrowers is offered the same short term loan as well as an additional long maturity option. We isolate adverse selection from the causal effect of maturity on repaymen...

This paper presents a conceptual framework for explaining credit union (CU) loan delinquency and profitability in developing countries, together with empirical estimation for a unique sample of Latin American CUs. Delinquency and profitability were found to be responsive to the incentives that CUs create for their borrowers to repay loans. These incentives include loan and deposit rates, the us...

Research rarely reaches the discussion of loan sharks. This study describes how intentions are influenced by service, word-of-mouth, and subjective norms, with knowledge usury acting as a moderating variable. quantitative involved 150 respondents. The data collected was analyzed using structural Equation Modeling (SEM) SmartPLS 3 Software. According to this study, service significantly affected...

I would like for you to join me in a thought exercise to explore how and why our current generation of students are compelled to shoulder up to $100,000 in graduate school debt to enter our profession. Not only are the debt levels onerous, these loans typically bear interest rates of up to 7%. In contrast, it is easy to get a car loan for around 4%. What is the meaning of this for our newly min...

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...