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Borrower Targeting under Micro-finance Competition with Motivated MFIs

Brishti Guha () and Prabal Roy Chowdhury ()

No 05-2012, Working Papers from Singapore Management University, School of Economics

Abstract: We examine how increased competition among motivated MFIs impacts the poorest borrowers’ access to microfinance. We find that it depends on inequality, technology and the possibility of double-dipping (borrowing from several sources). Without competition, even a motivated MFI may lend to the not-so-poor in preference to the poor borrowers. If double-dipping is feasible, competition may encourage lending to the poor. The presence of double-dipping is critical for MFI competition to have this positive effect. When double-dipping is feasible, MFI coordination may worsen borrower targeting whenever inequality is intermediate. We discuss policy implications dealing with double dipping, MFI co-ordination and competition.

Keywords: Micro-finance competition; motivated MFIs; inequality; borrower targeting; technology. (search for similar items in EconPapers)
JEL-codes: D04 G21 L31 O16 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2012-02
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Published in SMU Economics and Statistics Working Paper Series

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