Credit risk in microfinance industry: Evidence from sub-Saharan Africa

Sydney Chikalipah ()
Additional contact information
Sydney Chikalipah: Bournemouth University

Review of Development Finance Journal, 2018, vol. 8, issue 1, 38-48

Abstract: Paradoxically, a plethora of empirical evidence in the traditional banking industry claims that smaller loans are associated with higher risk and the exact opposite is true for large loans. In this study we investigate these claims by estimating the relationship between loan sizes and credit risk in the microfinance industry. The sample used for our analysis incorporates over 2000 annual observations, and 632 microfinance institutions drawn from 37 countries of the sub-Saharan African (SSA) region over the period 1995 to 2013. Using the GMM technique, our estimates indicate that credit risk is positively related to loan sizes among microfinance institutions operating in SSA. Our findings have significant implications for the portfolio managers of microfinance institutions operating in SSA, particularly in light of the current wave of mobile money services in many countries.

Keywords: Credit risk; Female borrowers; Loan sizes; Microfinance; sub-Saharan Africa (search for similar items in EconPapers)
JEL-codes: C33 G21 G32 O12 O55 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://journals.co.za/content/journal/10520/EJC-fa4257d28 (text/html)

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:afj:journ3:v:8:y:2018:i:1:p:38-48

Access Statistics for this article

More articles in Review of Development Finance Journal from Chartered Institute of Development Finance Contact information at EDIRC.
Bibliographic data for series maintained by Kirk De Doncker ().