Delegated monitoring in crowdfunded microfinance: Evidence from Kiva

John P. Berns, Abu Zafar M. Shahriar and Luisa A. Unda

Journal of Corporate Finance, 2021, vol. 66, issue C

Abstract: We study the role of delegated monitoring in crowdfunded microfinance. We use data from Kiva, a crowdfunding platform, where crowds lend to borrowers through microfinance institutions (MFIs) instead of lending directly. These MFIs monitor debt contracts on behalf of crowds. We find that borrowers who are more intensely monitored by MFIs are more likely to repay crowdfunded loans on time. Monitoring is particularly important in reducing repayment problems of individual loans rather than group-based loans. Monitoring has a stronger impact in less competitive lending markets. We also find that when lending to borrowers, crowds are attentive to the loan-administering MFI's ability to monitor loans.

Keywords: Delegated monitoring; Crowdfunding; Microfinance; Kiva (search for similar items in EconPapers)
JEL-codes: D26 G21 G51 O16 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:66:y:2021:i:c:s0929119920303084

DOI: 10.1016/j.jcorpfin.2020.101864

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