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 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.

Bibliographic Details

Main Authors:	Liu, Yanyan, Deininger, Klaus
Language:	English
Published:	2009-03-01
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 https://hdl.handle.net/10986/4080
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