Consumption, Commercial or Mortgage Loans: Does it Matter for MFIs in Latin America?

MIX Data Brief No. 3

16 Pages Posted: 1 Oct 2009 Last revised: 26 Oct 2010

Adrian Gonzalez

Doing Business Report

Date Written: September 1, 2009

Abstract

Using data on number of borrowers and loan portfolio by credit type, this paper shows that the specific credit type composition of MFIs in Latin America does matter for their performance. In particular:
• Compared with microenterprise loans, higher shares of consumption loans are associated with higher yields, lower (worse) portfolio quality, and higher profitability.
• More participation of mortgages is associated with smaller MFIs in terms of borrowers, lower operating expenses as percentage of average gross loan portfolio (GLP) and lower yields, higher arrears, and no difference in defaults and profitability levels.
• In comparison with microenterprise loans, higher shares of commercial loans are associated with larger aggregate average loan sizes as percentage of Gross National Income per capita (GNI) and larger MFIs by GLP, higher cost per borrower, lower yields and lower portfolio quality.

Keywords: microfinance, consumption loans, mortage loans, commercial loans, performance

Suggested Citation

Gonzalez, Adrian, Consumption, Commercial or Mortgage Loans: Does it Matter for MFIs in Latin America? (September 1, 2009). MIX Data Brief No. 3. Available at SSRN: https://ssrn.com/abstract=1480884 or http://dx.doi.org/10.2139/ssrn.1480884

Adrian Gonzalez (Contact Author)

Doing Business Report ( email )

2121 Pennsylvania Avenue, NW
Washington, DC 20433
United States

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