The Impact of Collections Strategy on the Profitability of Unsecured Bank Micro-Loans

A Kahn and M Ward

Studies in Economics and Econometrics, 2008, vol. 32, issue 3, 1-19

Abstract: This research examines bank collections strategy by comparing two micro-loan books; one using a behaviour based strategy, in which a client is encouraged to re-establish regular payments and the other using an arrears based strategy, where the client must repay missed instalments immediately. The results show that the collections outcome does not vary according to collections strategy. However, in contrast to industry best practice, behaviour based collections results in 3,37% more revenue when the loan is rehabilitated, and a 4,54% reduction in losses when the loan is written off. The study also finds that the cost of using a behaviour based collections strategy is lower.

Date: 2008
References: Add references at CitEc
Citations:

Downloads: (external link)
http://hdl.handle.net/10.1080/10800379.2008.12106453 (text/html)
Access to full text is restricted to subscribers.

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:taf:rseexx:v:32:y:2008:i:3:p:1-19

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rsee20

DOI: 10.1080/10800379.2008.12106453

Access Statistics for this article

Studies in Economics and Econometrics is currently edited by Willem Bester

More articles in Studies in Economics and Econometrics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().