Determinants of Repayment Performance in Indian Micro-Credit Groups

13 Pages Posted: 20 Apr 2016

See all articles by Klaus Deininger

Klaus Deininger

World Bank - Development Economics Group (DEC); World Bank - Development Research Group (DECRG)

Yanyan Liu

World Bank

Date Written: March 1, 2009

Abstract

Despite their potential importance and ease of modification, impacts of monitoring and loan recovery arrangements on micro-credit groups' repayment performance have rarely been studied. Data on 3,350 expired group loans in 300 Indian villages highlight that regular monitoring and audits, high repayment frequency, consumption smoothing support through rice credit, and having group savings deposited with the lender all significantly increase repayment rates. Estimated magnitudes of their effects vastly exceed those of members' socio-economic characteristics. Significantly lower repayment on loans originating in externally provided grant resources suggests that stringent monitoring will be essential for these to have a sustainable impact.

Keywords: Access to Finance, Debt Markets, Bankruptcy and Resolution of Financial Distress, Strategic Debt Management

Suggested Citation

Deininger, Klaus and Liu, Yanyan, Determinants of Repayment Performance in Indian Micro-Credit Groups (March 1, 2009). World Bank Policy Research Working Paper No. 4885, Available at SSRN: https://ssrn.com/abstract=1372962

Klaus Deininger (Contact Author)

World Bank - Development Economics Group (DEC) ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://econ.worldbank.org/staff/kdeininger

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Yanyan Liu

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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