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Effect of Consulting on Microcredit Repayment in Korea

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  • Oh, Yoon Hae

Abstract

This study examines the effect of a one-on-one outsourced pre-lending consulting service on the repayment behavior of microcredit borrowers in Korea with administrative data from the Smile Microcredit Bank. A random change in the cut-off loan amount for mandatory consulting is utilized as an identification strategy. This three-day pre-lending business consulting service is effective in encouraging repayment behavior of existing businesses but it has no significant effect on start-up loans. The effectiveness of the consulting service in deterring delinquency with regard to existing loans is greater among male borrowers than among females.

Suggested Citation

  • Oh, Yoon Hae, 2015. "Effect of Consulting on Microcredit Repayment in Korea," KDI Journal of Economic Policy, Korea Development Institute (KDI), vol. 37(3), pages 55-74.
    • Handle: RePEc:zbw:kdijep:v:37:y:2015:i:3:p:55-74
    DOI: 10.23895/kdijep.2015.37.3.55
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    References listed on IDEAS

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    More about this item

    Keywords

    Microcredit; Nonfinancial Service; Consulting; Loan; Repayment; Arrear;
    All these keywords.

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • J1 - Labor and Demographic Economics - - Demographic Economics
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise
    • N25 - Economic History - - Financial Markets and Institutions - - - Asia including Middle East

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