Discipline and Flexibility: A Behavioral Perspective on Product Design in Microfinance

Marc Labie, Carolina Laureti () and Ariane Szafarz

No 15-020, Working Papers CEB from ULB -- Universite Libre de Bruxelles

Abstract: The success of both microcredit and micro-savings products rests upon simplicity and standardization in order to stimulate client discipline. Meanwhile, these products lack flexibility. This paper attempts to make sense of behavioral product design in microfinance. We focus on the potential trade-offs between discipline and flexibility. While discipline devices encourage clients make payments duly on time, flexibility improves clients’ day-to-day money management and helps them cope with shocks. Our contribution is twofold. First, we highlight the evidencebased advantages and disadvantages of flexible products in microfinance. Second, we present best-practice examples of flexible products offered bymicrofinance institutions worldwide.

Keywords: Microfinance; discipline; flexibility; commitment; incentive (search for similar items in EconPapers)
JEL-codes: D01 D82 D91 G21 O12 (search for similar items in EconPapers)
Pages: 36 p.
Date: 2016-06-09
New Economics Papers: this item is included in nep-mfd
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Citations: View citations in EconPapers (3)

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