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Microfinance and Investment: A Comparison with Bank and Informal Lending

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  • Dalla Pellegrina, Lucia

Abstract

Summary Comparing the impact of different types of credit on households' investment in Bangladesh, we find that loans from microfinance institutions are likely to be channeled toward non-agricultural activities while both informal and bank lending are associated to a higher expenditure in agricultural inputs. Estimated effects are net of the differences in the amount borrowed, interest rates, and collateral. Results suggest that features which are specific to microfinance--such as tight repayment schedules and land-based eligibility rules--may reduce the suitability of this source of funds for the farming sector.

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  • Dalla Pellegrina, Lucia, 2011. "Microfinance and Investment: A Comparison with Bank and Informal Lending," World Development, Elsevier, vol. 39(6), pages 882-897, June.
  • Handle: RePEc:eee:wdevel:v:39:y:2011:i:6:p:882-897
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    Cited by:

    1. Migheli, Matteo, 2016. "Land Ownership, Access to Informal Credit and Its Cost in Rural Vietnam," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201619, University of Turin.
    2. Weber, Ron & Mußhoff, Oliver & Petrick, Martin, 2014. "How flexible repayment schedules affect credit risk in agricultural microfinance," DARE Discussion Papers 1404, Georg-August University of Göttingen, Department of Agricultural Economics and Rural Development (DARE).
    3. Weber, Ron & Musshoff, Oliver, 2015. "Does pre-defined flexibility come with teh cost of higher credit risk? Evidence from agricultural micro lending in Madagascar," 2015 Conference, August 9-14, 2015, Milan, Italy 211905, International Association of Agricultural Economists.
    4. Lucia dalla Pellegrina & Antonio Scollo, 2016. "The Role of Borrower-Cosigner Kinship Relations on Loan Default," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 2(3), pages 421-444, November.
    5. Lucia, Dalla Pellegrina & Angela, De Michele & Giorgio, Di Maio & Paolo, Landoni & Susanna, Parravicini, 2017. "Group meeting frequency and borrowers’ repayment performance in microfinance: Evidence from a quasi-natural experiment in South Africa," Working Papers 374, University of Milano-Bicocca, Department of Economics, revised 30 Nov 2017.
    6. Robert M Hirth & Daanish Pestonjee, 2016. "How Group Lending Affects Innovation: Evidence From Ethiopia," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 21(04), pages 1-15, December.
    7. Ha van Dung, 2014. "Short-term precaution, insurance and saving mechanisms in rural Vietnam," Working Papers CIE 82, Paderborn University, CIE Center for International Economics.
    8. Pierrick Baraton & Florian Léon, 2016. "Financial Constraint, Entrepreneurship and Sectoral Migrations ," CREA Discussion Paper Series 16-09, Center for Research in Economic Analysis, University of Luxembourg.
    9. Hermes, Niels & Lensink, Robert, 2011. "Microfinance: Its Impact, Outreach, and Sustainability," World Development, Elsevier, vol. 39(6), pages 875-881, June.
    10. repec:kap:iaecre:v:24:y:2018:i:1:d:10.1007_s11294-018-9672-1 is not listed on IDEAS
    11. Maryann Bylander & Erin Hamilton, 2015. "Loans and Leaving: Migration and the Expansion of Microcredit in Cambodia," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 34(5), pages 687-708, October.

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