Microfinance and Investment: A Comparison with Bank and Informal Lending

Lucia Dalla Pellegrina

World Development, 2011, vol. 39, issue 6, 882-897

Abstract: Summary Comparing the impact of different types of credit on households' investment in Bangladesh, we find that loans from microfinance institutions are likely to be channeled toward non-agricultural activities while both informal and bank lending are associated to a higher expenditure in agricultural inputs. Estimated effects are net of the differences in the amount borrowed, interest rates, and collateral. Results suggest that features which are specific to microfinance--such as tight repayment schedules and land-based eligibility rules--may reduce the suitability of this source of funds for the farming sector.

Keywords: microfinance; banks; informal; lending; investment (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (18)

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