Mitigating Loan Prepayment Troubles during Microfinance Expansion: Evidence from a Large Panel

Jules Yimga

Journal of Economic Development, 2017, vol. 42, issue 2, 39-49

Abstract: Using linear panel methods, this article tests whether the surge in microfinance lending during the boom years of 2004-2008 hurt loan repayment rates. Surprisingly, we find evidence that loan delinquency is inversely related to microfinance growth. This result is contrary to the long-standing view that fast microfinance expansion leads to increased loan delinquency. This suggests the existence of a larger pool of high quality borrowers that may have not yet been tapped in new markets. This finding is robust across estimation methods and even after controlling for cross-sectional and temporal dependencies.

Keywords: Microfinance; Microfinance Institutions; Loan Delinquency; Panel Estimation (search for similar items in EconPapers)
JEL-codes: G21 G32 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:jed:journl:v:42:y:2017:i:2:p:39-49

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