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For compassion or money? The factors influencing the funding of micro loans

Author

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  • Heller, Lauren R.
  • Badding, Kayla D.

Abstract

Aided by the Internet, microfinance institutions have found new ways to expand the reach of financing entrepreneurial projects on a small scale. Using a unique data set of individual loans posted to Kiva.org, we explore the determinants of lenders’ nonprofit lending choices in the growing microfinance industry. We find that lenders make choices in purposive ways even in the absence of market interest rates, especially with respect to the demographic characteristics of borrowers and the uses of proposed funds. Hence, the results provide valuable new information about consumer choice in charitable giving and investment.

Suggested Citation

  • Heller, Lauren R. & Badding, Kayla D., 2012. "For compassion or money? The factors influencing the funding of micro loans," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 41(6), pages 831-835.
  • Handle: RePEc:eee:soceco:v:41:y:2012:i:6:p:831-835 DOI: 10.1016/j.socec.2012.08.005
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    References listed on IDEAS

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    1. Rajdeep Sengupta & Craig P. Aubuchon, 2008. "The microfinance revolution: an overview," Review, Federal Reserve Bank of St. Louis, issue Jan, pages 9-30.
    2. Matt Flannery, 2007. "Kiva and the Birth of Person-to-Person Microfinance," Innovations: Technology, Governance, Globalization, MIT Press, pages 31-56.
    3. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, pages 1569-1614.
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    More about this item

    Keywords

    Microfinance; Lending; Preferences; Kiva;

    JEL classification:

    • A1 - General Economics and Teaching - - General Economics
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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