Lending policies of informal, formal and semiformal lenders
AbstractThis paper compares lending policies of formal, informal and semiformal lenders with respect to household lending in Vietnam. The analysis suggests that the probability of using formal or semiformal credit increases if borrowers provide collateral, a guarantor and/or borrow for business-related activities. The probability of using informal credit increases for female borrowers. It also appears that the probability of using formal credit increases in household welfare up to a certain threshold, but at a decreasing rate. In addition, the paper discerns the determinants of probability of default across lender types. Default risk of formal credit appears to be strongly affected by formal loan contract terms, e.g., loan interest rate and form of loan repayment, whereas default risk on informal loans is significantly related to the presence of propinquity and other internal characteristics of the borrowing household. Overall, the study raises several important implications for the screening, monitoring and enforcement instruments that may be employed by different types of lenders. Copyright (c) 2007 The Authors Journal compilation (c) 2007 The European Bank for Reconstruction and Development .
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Bibliographic InfoArticle provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.
Volume (Year): 15 (2007)
Issue (Month): 2 (04)
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Postal: One Exchange Square, London EC2A 2JN
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0967-0750
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- Isabelle Agier & Ariane Szafarz, 2011. "Credit to Women Entrepreneurs: The Curse of the Trustworthier Sex," Working Papers CEB 11-005, ULB -- Universite Libre de Bruxelles.
- Khoi, Phan Dinh & Gan, Christopher & Nartea, Gilbert V. & Cohen, David A., 2013. "Formal and informal rural credit in the Mekong River Delta of Vietnam: Interaction and accessibility," Journal of Asian Economics, Elsevier, vol. 26(C), pages 1-13.
- Iwase Maomi, 2011. "Current Situation on Consumer Credit in Vietnam Legal Framework for Formal Financial Sector," Japan Social Innovation Journal, University of Hyogo Institute for Policy Analysis and Social Innovation, vol. 1(1), pages 40-45, April.
- Thomas Dufhues & Gertrud Buchenrieder & Hoang Dinh Quoc, 2012. "Social capital and loan repayment performance in Northern Vietnam," Agricultural Economics, International Association of Agricultural Economists, vol. 43(3), pages 277-292, 05.
- Isabelle Agier & Ariane Szafarz, 2013.
"Subjectivity in Credit Allocation to Micro-Entrepreneurs: Evidence from Brazil,"
ULB Institutional Repository
2013/148889, ULB -- Universite Libre de Bruxelles.
- Isabelle Agier & Ariane Szafarz, 2013. "Subjectivity in credit allocation to micro-entrepreneurs: evidence from Brazil," Small Business Economics, Springer, vol. 41(1), pages 263-275, June.
- Isabelle Agier & Ariane Szafarz, 2011. "Subjectivity in Credit Allocation to Micro-Entrepreneurs: Evidence from Brazil," Working Papers CEB 11-016, ULB -- Universite Libre de Bruxelles.
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