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Financial Access Under the Microscope

Camelia Minoiu

No 05/2018, NCID Working Papers from Navarra Center for International Development, University of Navarra

Abstract: We examine the impact of a large-scale microcredit expansion program on financial access and the transition of previously unbanked borrowers to commercial banks. Administrative data on the universe of loans to individuals show that the program improved access to credit, especially in underdeveloped areas. A sizeable share of first-time borrowers who need a second loan switch from microfinance institutions to commercial banks, which cream-skim low-risk borrowers and grant them larger, cheaper, and longer-term loans. These borrowers are not riskier than those already at commercial banks. The microfinance sector, together with well-functioning credit reference bureaus, help mitigate information frictions in credit markets.

Keywords: Financial inclusion; microfinance; loan expansion programs; credit reference bureau (search for similar items in EconPapers)
JEL-codes: G21 O12 O55 (search for similar items in EconPapers)
Pages: 54 pages
Date: 2018-09
New Economics Papers: this item is included in nep-ban, nep-fle, nep-mfd and nep-pay
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