Active risk management and loan contract terms: Evidence from rated microfinance institutions

Hubert Tchakoute-Tchuigoua
Authors registered in the RePEc Author Service: Hubert TCHAKOUTE TCHUIGOUA

The Quarterly Review of Economics and Finance, 2012, vol. 52, issue 4, 427-437

Abstract: The aim of this article is to test the relationship among organizational architecture, joint liabilities contracts, and loan conditions. Based on a sample of 135 MFIs rated between 2003 and 2008, the study shows that solidarity lending and a decentralized credit decision have no significant influence on loan conditions. Being a village bank lender is significantly associated with higher interest rates charged, higher outreach, lower depth of outreach, and higher transaction costs. Results seem to highlight the existence of a trade-off between outreach and the average loan size per borrower when MFIs decentralize credit decisions or establish joint liability contracts.

Keywords: Organizational architecture; Joint liability contracts; Interest rate; Efficiency; Portfolio (search for similar items in EconPapers)
JEL-codes: G21 G32 G39 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:quaeco:v:52:y:2012:i:4:p:427-437

DOI: 10.1016/j.qref.2012.08.001

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