Effect of Consulting on Microcredit Repayment in Korea

Yoon Hae Oh

KDI Journal of Economic Policy, 2015, vol. 37, issue 3, 55-74

Abstract: This study examines the effect of a one-on-one outsourced pre-lending consulting service on the repayment behavior of microcredit borrowers in Korea with administrative data from the Smile Microcredit Bank. A random change in the cut-off loan amount for mandatory consulting is utilized as an identification strategy. This three-day pre-lending business consulting service is effective in encouraging repayment behavior of existing businesses but it has no significant effect on start-up loans. The effectiveness of the consulting service in deterring delinquency with regard to existing loans is greater among male borrowers than among females.

Keywords: Microcredit; Nonfinancial Service; Consulting; Loan; Repayment; Arrear (search for similar items in EconPapers)
JEL-codes: D1 G21 J1 L3 N25 (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:kdijep:v:37:y:2015:i:3:p:55-74

DOI: 10.23895/kdijep.2015.37.3.55

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