Does pre-defined flexibility come with teh cost of higher credit risk? Evidence from agricultural micro lending in Madagascar

Ron Weber and Oliver Musshoff

No 211905, 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists

Abstract: Using a unique dataset from a commercial microfinance institution in Madagascar, this paper investigates how the provision of microfinance loans with (in)flexible repayment schedules affects loan delinquencies of agricultural borrowers. We estimate different repayment functions to compare loan delinquencies of agricultural and non-agricultural borrowers and apply a quasi-experimental approach to investigate whether introducing flexible repayment schedules affects loan delinquencies of seasonal agricultural borrowers. In this attempt, three different delinquency categories reflecting different levels of credit risk are assessed. Our results reveal that loan delinquencies of non-seasonal agricultural borrowers without grace periods are not significantly different from those of non-farmers. Furthermore, we find that seasonal agricultural borrowers with grace periods show significantly higher delinquencies than non-farmers. Within the group of agricultural borrowers we find that introducing grace periods increases delinquency levels only in the lowest delinquency category, while we find no significant effect in the higher delinquency categories.

Keywords: Agribusiness; Financial Economics; International Development (search for similar items in EconPapers)
Pages: 25
Date: 2015
New Economics Papers: this item is included in nep-agr and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/211905/files/W ... k%20Evidence-266.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:iaae15:211905

DOI: 10.22004/ag.econ.211905

Access Statistics for this paper

More papers in 2015 Conference, August 9-14, 2015, Milan, Italy from International Association of Agricultural Economists Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search (aesearch@umn.edu).