IDEAS home Printed from https://ideas.repec.org/a/jed/journl/v42y2017i2p39-49.html

Mitigating Loan Prepayment Troubles during Microfinance Expansion: Evidence from a Large Panel

Author

Listed:
  • Jules Yimga

    (Embry-Riddle Aeronautical University, Department of Business)

Abstract

Using linear panel methods, this article tests whether the surge in microfinance lending during the boom years of 2004-2008 hurt loan repayment rates. Surprisingly, we find evidence that loan delinquency is inversely related to microfinance growth. This result is contrary to the long-standing view that fast microfinance expansion leads to increased loan delinquency. This suggests the existence of a larger pool of high quality borrowers that may have not yet been tapped in new markets. This finding is robust across estimation methods and even after controlling for cross-sectional and temporal dependencies.

Suggested Citation

  • Jules Yimga, 2017. "Mitigating Loan Prepayment Troubles during Microfinance Expansion: Evidence from a Large Panel," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 42(2), pages 39-49, June.
    • Handle: RePEc:jed:journl:v:42:y:2017:i:2:p:39-49
    as

    Download full text from publisher

    File URL: http://jed.or.kr/full-text/42-2/3.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. John C. Driscoll & Aart C. Kraay, 1998. "Consistent Covariance Matrix Estimation With Spatially Dependent Panel Data," The Review of Economics and Statistics, MIT Press, vol. 80(4), pages 549-560, November.
    2. Daniel Hoechle, 2007. "Robust standard errors for panel regressions with cross-sectional dependence," Stata Journal, StataCorp LLC, vol. 7(3), pages 281-312, September.
    3. Ghatak, Maitreesh & Guinnane, Timothy W., 2003. "Erratum to "The economics of lending with joint liability: theory and practice" [J. Devel. Econ. 60 (1999) 195-228," Journal of Development Economics, Elsevier, vol. 70(1), pages 261-262, February.
    4. Joanna Ledgerwood, 1998. "Microfinance Handbook: An Institutional and Financial Perspective," World Bank Publications - Books, The World Bank Group, number 12383, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yimga, Jules, 2018. "Microfinance expansion and its effects on cost efficiency," The Quarterly Review of Economics and Finance, Elsevier, vol. 69(C), pages 205-216.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Izaskun Zuazu, 2023. "Structural Change and Gender Sectoral Segregation in Sub-Saharan Africa," Economics Working Paper Archive wp_1027, Levy Economics Institute.
    2. Ayhan, Fatih & Elal, Onuray, 2023. "The IMPACTS of technological change on employment: Evidence from OECD countries with panel data analysis," Technological Forecasting and Social Change, Elsevier, vol. 190(C).
    3. Chimere O. Iheonu, 2019. "Governance and Domestic Investment in Africa," Working Papers 19/001, European Xtramile Centre of African Studies (EXCAS).
    4. Shi, Ruoding & Isengildina Massa, Olga, "undated". "Double-Edged Sword: Liquidity Implications of Futures Hedging," 2018 Annual Meeting, August 5-7, Washington, D.C. 274106, Agricultural and Applied Economics Association.
    5. Raffaella Santolini, 2017. "Electoral Rules And Public Spending Composition: The Case Of Italian Regions," Contemporary Economic Policy, Western Economic Association International, vol. 35(3), pages 551-577, July.
    6. Ding, Mingfa, 2014. "Political Connections and Stock Liquidity: Political Network, Hierarchy and Intervention," Knut Wicksell Working Paper Series 2014/7, Lund University, Knut Wicksell Centre for Financial Studies.
    7. Olaoye, Olumide O. & Zerihun, Mulatu F. & Al-Faryan, Mamdouh Abdulaziz Saleh, 2025. "Is resource endowment a trigger for conflicts in sub-Saharan Africa? Unveiling the moderating role of income inequality," Ecological Economics, Elsevier, vol. 230(C).
    8. Skare, Marinko & Gavurova, Beata & Sinkovic, Dean, 2023. "Regional aspects of financial development and renewable energy: A cross-sectional study in 214 countries," Economic Analysis and Policy, Elsevier, vol. 78(C), pages 1142-1157.
    9. Wang, Jingyi & Guan, Hongjun & Zhang, Jie, 2025. "The impact of the digital economy on energy productivity: An empirical analysis based on 30 provinces in China," Energy, Elsevier, vol. 335(C).
    10. Polloni-Silva, Eduardo & Moreno, Rosina & Moralles, Herick Fernando, 2025. "Technological content and institutional quality of FDI: Investigating the effects on the environment in Brazil," International Business Review, Elsevier, vol. 34(6).
    11. Indra de Soysa, 2022. "Economic freedom vs. egalitarianism: An empirical test of weak & strong sustainability, 1970–2017," Kyklos, Wiley Blackwell, vol. 75(2), pages 236-268, May.
    12. Chulan Lasantha Kukule Nawarathna, 2025. "The Nexus Between Female Labor Force Participation and Economic Development: A Global Study Across the Phases of Demographic Dividends," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(15), pages 426-449, April.
    13. Balbuzanov, Ivan & Gars, Jared & Stalinski, Mateusz & Tjernström, Emilia, 2025. "Incentivizing Engagement: Experimental Evidence on Journalist Performance Pay," CAGE Online Working Paper Series 763, Competitive Advantage in the Global Economy (CAGE).
    14. Chukwuemeka Chinonso Emenekwe & Robert Ugochukwu Onyeneke & Chinedum Uzoma Nwajiuba & Ifeoma Quinette Anugwa & Obioma Uchenna Emenekwe, 2025. "Determinants of consumption-based and production-based carbon emissions," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(5), pages 10303-10339, May.
    15. Alessandro Federici & Pierluigi Montalbano, 2012. "Macroeconomic volatility, consumption behaviour and welfare: A cross-country analysis," Working Paper Series 3612, Department of Economics, University of Sussex Business School.
    16. Aynur Pala, 2014. "The Effect of Valuation Ratios, Gold Price, and Petroleum Price on Equity Returns: A Comparison of Static Panel and Quantile Regressions," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 4(1), pages 80-89, January.
    17. Stéphane Mbiankeu Nguea & Hervé Kaffo Fotio, 2025. "The heterogeneous effects of renewable energy, urbanization and democracy on CO2 emissions: Does economic growth matter?," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 27(4), pages 8835-8861, April.
    18. Dilla, Diana, 2017. "Staatsverschuldung und Verschuldungsmentalität [Public Debt and Debt Mentality]," MPRA Paper 79432, University Library of Munich, Germany.
    19. Kai Daniel Schmid & Michael Schmidt, 2012. "EMU and the Renaissance of Sovereign Credit Risk Perception," IAW Discussion Papers 87, Institut für Angewandte Wirtschaftsforschung (IAW).
    20. Gnangnon Sèna Kimm, 2017. "Empirical Evidence on the Impact of Multilateral Trade Liberalization on Domestic Trade Policy," Global Economy Journal, De Gruyter, vol. 17(3), pages 1-14, September.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:jed:journl:v:42:y:2017:i:2:p:39-49. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sung Y. Park (email available below). General contact details of provider: https://edirc.repec.org/data/eccaukr.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.