How flexible repayment schedules affect credit risk in agricultural microfinance

Ron Weber, Oliver Musshoff and Martin Petrick

No 187434, Department of Agricultural and Rural Development (DARE) Discussion Papers from Georg-August-Universitaet Goettingen, Department of Agricultural Economics and Rural Development (DARE)

Abstract: Using a unique dataset of a commercial microfinance institution in Madagascar, this paper investigates how the provision of microfinance loans with (in)flexible repayment schedules affects loan delinquencies of agricultural borrowers. Flexible repayment schedules allow a redistribution of principal payments during periods with low agricultural returns to periods when agricultural returns are high. We develop a theoretical framework and apply and estimate an econometric model for the loan repayment behavior of agricultural micro-borrowers with seasonal and non-seasonal production types. Our results reveal that delinquencies of non-seasonal farmers and seasonal farmers with inflexible repayment schedules are not significantly different from those of non-farmers. Furthermore, we find that seasonal farmers with flexible repayment schedules show significantly higher delinquencies than non-farmers in low delinquency categories, but we also find that this effect disappears in the highest delinquency category.

Keywords: Agribusiness; Agricultural Finance (search for similar items in EconPapers)
Pages: 35
Date: 2014-04
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://ageconsearch.umn.edu/record/187434/files/W ... -DARE_DP_No_1404.pdf (application/pdf)

Related works:
Working Paper: How flexible repayment schedules affect credit risk in agricultural microfinance (2014)
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:ags:gadadp:187434

DOI: 10.22004/ag.econ.187434

Access Statistics for this paper

More papers in Department of Agricultural and Rural Development (DARE) Discussion Papers from Georg-August-Universitaet Goettingen, Department of Agricultural Economics and Rural Development (DARE) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search (aesearch@umn.edu).