IDEAS home Printed from
   My bibliography  Save this paper

Bank Provisioning and Microcredit


  • Santiago Caicedo
  • Dairo Estrada


In this paper we develop a banking model to study the traditional credit and the microcredit markets. We suppose a monopolistic traditional bank that specializes in screening potential debtors based in their risk profile and a microcredit bank that focus on monitoring the riskier profile customers. The model is calibrated with Colombian financial data. The results show when banking provisioning depend only on the screening level, a significant portion of the risky debtors are left out of the financial system and the microcredit bank would not operate in certain market conditions. Nonetheless, when we consider provisions that include monitoring considerations, the microcredit bank would be profitable for the different debtor risk profiles, and its optimal monitoring level is higher in comparison with the ones chosen by the traditional bank. Keywords: Bank Provisioning, Microcredit banking model, Regulation and risk profiles, debtor screening, debtor monitoring.

Suggested Citation

  • Santiago Caicedo & Dairo Estrada, 2010. "Bank Provisioning and Microcredit," Temas de Estabilidad Financiera 049, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:temest:049
    DOI: 10.32468/tef.49

    Download full text from publisher

    File URL:
    Download Restriction: no

    File URL:
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item

    References listed on IDEAS

    1. Javier Gutiérrez Rueda & Nancy Zamudio Gómez, 2008. "Medidas de Concentración y Competencia," Temas de Estabilidad Financiera 029, Banco de la Republica de Colombia.
    Full references (including those not matched with items on IDEAS)

    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.

      More about this item


      bank provisioning; microcredit banking model; regulation and risk profiles; debtor screening; debtor monitoring.;
      All these keywords.

      JEL classification:

      • D20 - Microeconomics - - Production and Organizations - - - General
      • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
      • D42 - Microeconomics - - Market Structure, Pricing, and Design - - - Monopoly
      • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
      • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation


      Access and download statistics


      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:bdr:temest:049. See general information about how to correct material in RePEc.

      For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: .

      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: Clorith Angélica Bahos-Olivera (email available below). General contact details of provider: .

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

      IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.