After the Microfinance Crisis: Assessing the Role of Government-Led Microcredit Alternatives

14 Pages Posted: 20 Apr 2016

See all articles by Jordi De la torre

Jordi De la torre

affiliation not provided to SSRN

Xavier Giné

World Bank - Development Research Group (DECRG)

Tara Vishwanath

World Bank - Economic Development Institute

Date Written: September 1, 2011

Abstract

In light of the recent microfinance crisis in South India, government-run institutions in general, and primary agricultural credit cooperatives in particular, may end up playing a larger role in the provision of financial services for the poor. Using survey data collected in 2007 from three districts in Andhra Pradesh, this paper assesses the performance of 72 primary agricultural credit cooperatives and finds lack of training among the management. In addition, primary agricultural credit cooperatives tend to be used as political instruments and, as a result, borrowers prioritize all debt obligations (microfinance institutions, informal lenders, etc.) before repaying their primary agricultural credit cooperative loans. The authors suggest that if the performance of primary agricultural credit cooperatives does not improve, a larger government role in the supply of credit may undermine the culture of repayment.

Keywords: Access to Finance, Debt Markets, Bankruptcy and Resolution of Financial Distress, Banks & Banking Reform, Financial Intermediation

Suggested Citation

De la torre, Jordi and Gine, Xavier and Vishwanath, Tara, After the Microfinance Crisis: Assessing the Role of Government-Led Microcredit Alternatives (September 1, 2011). World Bank Policy Research Working Paper No. 5808. Available at SSRN: https://ssrn.com/abstract=1932592

Jordi De la torre

affiliation not provided to SSRN ( email )

Xavier Gine

World Bank - Development Research Group (DECRG) ( email )

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

HOME PAGE: https://sites.google.com/site/decrgxaviergine/

Tara Vishwanath (Contact Author)

World Bank - Economic Development Institute ( email )

1818 H Street
Washington, DC 20433
United States
202-473-1152 (Phone)

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