Business Training with a Better-Informed Lender: Theory and Evidence from Microcredit in France

Renaud Bourlès (), Anastasia Cozarenco, Dominique Henriet and Xavier Joutard ()
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Anastasia Cozarenco: CERMi - Centre for European Research in Microfinance, MRM - Montpellier Research in Management - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier
Dominique Henriet: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique
Xavier Joutard: LEST - Laboratoire d'Economie et de Sociologie du Travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po

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Abstract: In the microfinance sector, experienced lenders enjoy an information advantage over first-time entrepreneurs. Our study proposes an analysis of the business training provided on a par with microloans and its potential effect on borrowers'behavior. First, we present a simple theoretical mechanism showing that an information advantage concerning borrower risk can lead to a non-monotonic relationship between risk and business training provision. Second, using a hand-collected data set of loan applications to a French MFI, we empirically examine the relationship between business training provision and borrower risk, controlling for selection bias and endogeneity. The collected evidence supports the existence of a non-monotonic relationship and shows that business training significantly increases the survival time of loans. Our results are robust to alternative econometric models.

Keywords: Business training; Microcredit; Informed lender (search for similar items in EconPapers)
Date: 2022-12
New Economics Papers: this item is included in nep-ban and nep-mfd
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03934370v1
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Published in Annals of Economics and Statistics, 2022, 148, pp.65-108. ⟨10.2307/48706310⟩

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Related works:
Journal Article: Business Training with a Better-Informed Lender: Theory and Evidence from Microcredit in France (2022)
Working Paper: Business Training with a Better-Informed Lender: Theory and Evidence from Microcredit in France (2022)
Working Paper: Business Training and Loan Repayment: Theory and Evidence from Microcredit in France (2018)
Working Paper: Business Training Allocation and Credit Scoring: Theory and Evidence from Microcredit in France (2015)
Working Paper: Business Training Allocation and Credit Scoring: Theory and Evidence from Microcredit in France (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:halshs-03934370

DOI: 10.2307/48706310

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