The Intermediary Role of Microloan Officers: Evidence from Ethiopia

Working Papers in Economics 581, December 2013, University of Gothenburg

29 Pages Posted: 28 Dec 2013

See all articles by Oleg Shchetinin

Oleg Shchetinin

University of Gothenburg

Conny E. Wollbrant

University of Gothenburg - School of Business, Economics and Law

Date Written: December 12, 2013

Abstract

Microfinance institutions are key financial intermediaries between donors and borrowers in developing countries. Loan officers are crucial for establishing and maintaining the relationship between borrowers and microfinance institutions. This paper studies the impact of loan officers on the loan portfolio. We use a survey and choice experiment of 800 loan officers to estimate loan officers' preferences over loan allocation. We investigate how these preferences are affected by the organizational structure of the microfinance institution, for example, incentive provision. We pay special attention to monitoring of borrowers and loan officer discretion. The most important determinants of loan allocation are related to the financial viability of microfinance institutions rather than the pro-social mission of microfinance. We derive recommendations for the governance of microfinance institutions.

Keywords: Financial intermediation, Microfinance Loan officers, Loan allocation, Choice experiment

JEL Classification: G21, L31, O16

Suggested Citation

Shchetinin, Oleg and Wollbrant, Conny E., The Intermediary Role of Microloan Officers: Evidence from Ethiopia (December 12, 2013). Working Papers in Economics 581, December 2013, University of Gothenburg, Available at SSRN: https://ssrn.com/abstract=2372073 or http://dx.doi.org/10.2139/ssrn.2372073

Oleg Shchetinin (Contact Author)

University of Gothenburg ( email )

Box 640
Vasagatan 1, E-building, floor 5 & 6
Göteborg, 40530
Sweden

Conny E. Wollbrant

University of Gothenburg - School of Business, Economics and Law ( email )

Vasagatan 1
Goteborg, 40530
Sweden

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