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Over-Indebtedness in Microfinance – An Empirical Analysis of Related Factors on the Borrower Level

Listed author(s):
  • Schicks, Jessica

This paper analyzes the over-indebtedness of microborrowers in Ghana from a customer protection perspective. It measures over-indebtedness as a subjective indicator based on loan-related sacrifices that borrowers report. It finds that male microborrowers are more likely to be over-indebted. So are borrowers with adverse economic shocks, low returns on investment, and non-productive loan use. Over-indebtedness is lower for borrowers with good debt-literacy. General financial literacy and numeracy seem insufficient to reduce over-indebtedness. The paper details the relationship of the above factors to the specific sacrifices borrowers make and suggests that policy measures address the full complexity of the over-indebtedness phenomenon.

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File URL: http://www.sciencedirect.com/science/article/pii/S0305750X13001988
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Article provided by Elsevier in its journal World Development.

Volume (Year): 54 (2014)
Issue (Month): C ()
Pages: 301-324

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Handle: RePEc:eee:wdevel:v:54:y:2014:i:c:p:301-324
DOI: 10.1016/j.worlddev.2013.08.009
Contact details of provider: Web page: http://www.elsevier.com/locate/worlddev

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