Advanced Search
MyIDEAS: Login to save this article or follow this journal

Assessing the efficacy of a South African microlender's loan screening mechanism

Contents:

Author Info

  • Kuhn, M.E.
  • Darroch, Mark A.G.
  • Ortmann, Gerald F.
Registered author(s):

    Abstract

    Bivariate probit analysis was used to assess the efficacy of a South African microlender’s loan screening process. This micro-lender grants short-term cash loans to individuals who are employed and earning a fixed salary. Loan applicants with more stable incomes, who are contactable via telephone or post, who are employed in less risky business sectors, who have more disposable income relative to debt, and who have had a good credit history with other lenders, are more likely to be accepted. None of the factors with a significant effect on the loan screening decision could explain subsequent loan default by accepted applicants. The microlender may have screened out very risky clients and accepted a riskier, profitable pool of loan applicants with risk being controlled through effective monitoring. This is important where tangible collateral is unavailable and where the risk must be acceptable to commercial lenders wanting to link up with profitable micro-lenders.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://purl.umn.edu/54229
    Download Restriction: no

    Bibliographic Info

    Article provided by Agricultural Economics Association of South Africa (AEASA) in its journal Agrekon.

    Volume (Year): 39 (2000)
    Issue (Month): 4 (December)
    Pages:

    as in new window
    Handle: RePEc:ags:agreko:54229

    Contact details of provider:
    Email:
    Web page: http://www.aeasa.org.za/
    More information through EDIRC

    Related research

    Keywords: Financial Economics;

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Jacobson, Tor & Roszbach, Kasper, 1998. "Bank Lending Policy, Credit Scoring and Value at Risk," Working Paper Series 68, Sveriges Riksbank (Central Bank of Sweden).
    2. Hoff, Karla & Stiglitz, Joseph E, 1990. "Imperfect Information and Rural Credit Markets--Puzzles and Policy Perspectives," World Bank Economic Review, World Bank Group, vol. 4(3), pages 235-50, September.
    3. Mark Schreiner, 2001. "A Scoring Model of the Risk of Costly Arrears at a Microfinance Lender in Bolivia," Development and Comp Systems 0109005, EconWPA.
    4. Meng, Chun-Lo & Schmidt, Peter, 1985. "On the Cost of Partial Observability in the Bivariate Probit Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(1), pages 71-85, February.
    5. Boyes, William J. & Hoffman, Dennis L. & Low, Stuart A., 1989. "An econometric analysis of the bank credit scoring problem," Journal of Econometrics, Elsevier, vol. 40(1), pages 3-14, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:ags:agreko:54229. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.