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

Renaud Bourlès (), Anastasia Cozarenco, Dominique Henriet and Xavier Joutard

Annals of Economics and Statistics, 2022, issue 148, 65-108

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)
JEL-codes: C41 D82 G21 (search for similar items in EconPapers)
Date: 2022
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https://www.jstor.org/stable/48706310 (text/html)

Related works:
Working Paper: Business Training with a Better-Informed Lender: Theory and Evidence from Microcredit in France (2022) Downloads
Working Paper: Business Training with a Better-Informed Lender: Theory and Evidence from Microcredit in France (2022) Downloads
Working Paper: Business Training and Loan Repayment: Theory and Evidence from Microcredit in France (2018) Downloads
Working Paper: Business Training Allocation and Credit Scoring: Theory and Evidence from Microcredit in France (2015) Downloads
Working Paper: Business Training Allocation and Credit Scoring: Theory and Evidence from Microcredit in France (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:adr:anecst:y:2022:i:148:p:65-108

DOI: 10.2307/48706310

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