Determinants of microcredit repayment in Portugal: analysis of borrowers, loans and business projects

Jorge Mota, António Carrizo Moreira () and Cristóvão Brandão
Additional contact information
Jorge Mota: University of Aveiro
António Carrizo Moreira: University of Aveiro
Cristóvão Brandão: University of Aveiro

Portuguese Economic Journal, 2018, vol. 17, issue 3, No 1, 171 pages

Abstract: Abstract Microcredit programs in Portugal represent a unique case for studying the microcredit repayment determinants in a developed country, as it experienced a financial hardship in 2008–2009, with economic and social consequences that led to unemployment crisis. This research examined the determinants of microcredit loan repayment based on a sample of 752 microcredit loans granted in Portugal by the National Association for the Right to Credit, adopting individual lending mechanisms and granting loans through partnerships with several credit institutions. This is the first study to ascertain the influence that a set of factors – grouped into three categories: borrowers’ individual characteristics; loan characteristics; and characteristics of business projects implemented by borrowers – has on the repayment ability of microcredit programs, in a developed country of the Eurozone. Moreover, this is the first study using an ordered logistic regression (OLR) in estimating the determinants of microcredit loan repayment. Similar to previous studies, married borrowers tend to repay loans faster as they tend to be more responsible than single borrowers. Nationality seems to be an issue as foreigners tends to default the repayment loans. Finally, those involved in manufacturing activities perform better than those involved in service activities in repaying their loans. This clearly indicates that in developed countries special attention needs to be provided to minority groups as well as market/supply conditions, which are not normally considered in less favored economic countries.

Keywords: Microcredit; Determinants of repayment; Ordered logistic regression; Borrowers’ characteristics; Loan characteristics; Business projects characteristics; Portugal (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://link.springer.com/10.1007/s10258-018-0148-2 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

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:spr:portec:v:17:y:2018:i:3:d:10.1007_s10258-018-0148-2

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10258/PS2

DOI: 10.1007/s10258-018-0148-2

Access Statistics for this article

Portuguese Economic Journal is currently edited by Luís F. Costa

More articles in Portuguese Economic Journal from Springer, Instituto Superior de Economia e Gestao
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().