Do Microloan Officers Want to Lend to the Less Advantaged? Evidence from a Choice Experiment
41 Pages Posted: 2 Mar 2011
Date Written: February 25, 2011
The mission of microfinance is generally perceived as compensation for the failure of the mainstream financial institutions to deliver access to finance to the poor. Microloan officers have significant influence on microloans allocation as they contact loan applicants and process information inside microfinance institutions (MFIs). We conduct a choice experiment with microloan officers in Burundi to determine which clients are preferred for microloan allocation and whether the less advantaged are indeed targeted. The results suggest that the allocation of microloans is slightly in favor of the less advantaged, whereas the main determinant is the quality of the applicants' business projects. Somewhat surprisingly, we find only small differences in the determinants of the targeted groups between non-profit and profit-seeking MFIs.
Keywords: microfinance, choice experiment, microloan officers, non-profit organizations
JEL Classification: C83, C93, G21, L31, O55
Suggested Citation: Suggested Citation