Are Women “The role of lender-entrepreneur relationships on the availability of entrepreneurial microfinance for the poor"

Sugato Chakravarty (), Abu Shahriar () and Abu Zafar Shahriar ()
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Abu Shahriar: Purdue University
Abu Zafar Shahriar: Monash University

No 1020, Working Papers from Purdue University, Department of Consumer Sciences

Abstract: We examine the role of lender-entrepreneur relationships on the lending decision of microfinance institutions. Using primary data from Bangladesh, we show that the likelihood of being approved for microcredit increases in the magnitude of relationship driven information, and decreases in the lack of precision of such information. We further show that large microfinance institutions rely more on relationship metrics, as opposed to their smaller counterparts, because they are better able to produce precise information based on lending relationships. We discuss the implications of relationship-based lending for the survival and success of small enterprises and, their financiers, in low-income countries.

Keywords: entrepreneurial microfinance; lending relationships (search for similar items in EconPapers)
Pages: 45 pages
Date: 2014-03
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