Determinants of Repayment Performance in Indian Micro-Credit Groups

Determinants of Repayment Performance in Indian Micro-Credit Groups

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...

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Bibliographic Details
Main Authors: Deininger, Klaus, Liu, Yanyan
Format: Policy Research Working Paper
Language:English
Published: 2012
Subjects:
ACCESS TO INFORMATION
AMOUNT OF LOANS
ANNUAL INTEREST RATE
AUDITS
BANK LOANS
BORROWER
CASE OF DEFAULT
CASH COLLATERAL
COLLATERAL
COMMERCIAL BANK
COMMERCIAL BANK LOANS
COMMERCIAL BANKS
CONSUMPTION SMOOTHING
CREDIBILITY
CREDIT AGREEMENT
CREDIT CONSTRAINTS
CREDIT COOPERATIVE
CREDIT GROUPS
CREDIT INFORMATION
CREDIT INFORMATION SYSTEMS
CREDIT MARKET
CREDIT MARKETS
CREDIT WORTHINESS
DEFAULTS
DEPENDENT
DEPOSIT
DEVELOPING COUNTRIES
ECONOMIC CHARACTERISTICS
ECONOMIC DEVELOPMENT
ECONOMIC GROWTH
FINANCIAL AFFAIRS
FINANCIAL MARKETS
FINANCIAL PERFORMANCE
FINANCIAL SERVICES
FIRST LOAN
FULL REPAYMENT
GENDER
GROUP LENDING
GROUP LENDING PROGRAMS
GROUP LOANS
GROUP SAVINGS
HOUSEHOLDS
INDIVIDUAL LOAN
INSTALLMENT
INSTALLMENTS
INSURANCE
INTEREST RATE
INTERNAL SAVINGS
INTERNATIONAL BANK
INVESTMENT FUND
JOINT LIABILITY
LENDER
LOAN
LOAN CHARACTERISTICS
LOAN RECOVERY
LOAN REPAYMENT
LOAN SIZE
LOANS FROM BANKS
MARKETING
MFIS
MICRO-CREDIT
MICRO-FINANCE
MICROCREDIT
MICROFINANCE
MICROFINANCE INSTITUTIONS
MORAL HAZARD
OUTREACH
POOR BORROWERS
PROBABILITIES
PROBABILITY
PUBLIC GOODS
REPAYMENT
REPAYMENT INCENTIVES
REPAYMENT PERFORMANCE
REPAYMENT RATES
RISK POOLING
RURAL FINANCIAL MARKETS
SAVINGS
SOCIAL COLLATERAL
THRIFT
TRUST FUND
URBAN DEVELOPMENT
VILLAGE
VILLAGES
Online Access:http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20090330104823
http://hdl.handle.net/10986/4080
Description
Summary: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.

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