Abstract

http://ssrn.com/abstract=2039668
 
 

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What Drives A Long-Term Relationship In Microcredit? Insights from a Cambodian Microfinance Institution


Alberto Lanzavecchia


University of Padova, Italy

Luminita Enache


Victoria University of Wellington

March 2013

Working Paper No. 91 Centre for Accounting, Governance and Taxation Research School of Accounting and Commercial Law Victoria University of Wellington

Abstract:     
This article examines the determinants of the nominal value of loans in microcredit and the factors that drive long-term relationship banking. The dataset is drawn from primary data gathered from 216 randomly selected borrowers in a Cambodian microfinance institution. Analysis is performed using an OLS regression model.

The results confirm positive and significant impacts of real estate assets and loan purposes on the amount borrowed and a negative impact of being single as a civil status. Long-term relationships are positively affected by: age of borrower and purpose of loan; and negatively affected by female gender.

Contrary to general belief that microcredit is targeted to the “poorest of the poor”, a new market segment in microcredit was discovered within which MFI might target low-income/asset backed clients, granting loans on a “sustainable” basis, by applying the fundamental criteria of commercial banking: assessing credit worthiness and loss given default.

Number of Pages in PDF File: 19

Keywords: microcredit, collateral, loan size, Relationship banking, Cambodia

JEL Classification: G29, O16, I30

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Date posted: April 14, 2012 ; Last revised: August 20, 2013

Suggested Citation

Lanzavecchia, Alberto and Enache, Luminita, What Drives A Long-Term Relationship In Microcredit? Insights from a Cambodian Microfinance Institution (March 2013). Working Paper No. 91 Centre for Accounting, Governance and Taxation Research School of Accounting and Commercial Law Victoria University of Wellington. Available at SSRN: http://ssrn.com/abstract=2039668 or http://dx.doi.org/10.2139/ssrn.2039668

Contact Information

Alberto Lanzavecchia
University of Padova, Italy ( email )
Via del Santo, 33
Padova, PD 35123
Italy
+39 049 8274060 (Phone)
+39 178 2208411 (Fax)
Luminita Enache (Contact Author)
Victoria University of Wellington ( email )
New Zealand
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