Is there a Market for Micro-Lending in Industrialized Countries? - Evidence from Germany
In less developed and transition economies, microlending has become an efficient instrument for providing small and micro-businesses with the necessary financial resources to launch operations. In the industrialized countries, with their highly developed banking systems, however, there has been ongoing debate on the question of whether an uncovered demand for microlending services exists - and if so, how large this demand actually is. The present study explores customer preferences for microlending products based on a survey of 213 small and micro-business owners in Germany in the year 2005. Among the entrepreneurs interviewed, 15% reported revolving funding needs and an interest in microloans. We find that potential recipients of microloan products are retail business owners, foreign small business owners, and persons who had previously received private loans. Therefore, incumbent financial institutions as well as lenders entering the market are well advised to use a focused marketing strategy in targeting these specific groups. Furthermore, financial products should feature rapid access to short-term loans combined with personal contacts to loan officers who are able to thoroughly understand the client's business concept. A particularly noteworthy outcome of our study is that 65% of those surveyed financed their first three years of operations without applying for any loan at all. It is thoroughly possible that within this group a latent demand exists which could be unleashed by designing novel microlending products.
|Date of creation:||2006|
|Date of revision:|
|Contact details of provider:|| Postal: Kufsteinerstr. 7, 10825 Berlin|
Web page: http://www.gfa-kritikos.de/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Beatriz Armendáriz de Aghion & Jonathan Morduch, 2000. "Microfinance Beyond Group Lending," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(2), pages 401-420, July.
- Dwight M. Jaffee & Thomas Russell, 1976. "Imperfect Information, Uncertainty, and Credit Rationing," The Quarterly Journal of Economics, Oxford University Press, vol. 90(4), pages 651-666.
- Blanchflower, D.G. & Oswald, A., 1991.
"What Makes an Entrepreneur?,"
Economics Series Working Papers
99125, University of Oxford, Department of Economics.
- Kritikos, Alexander S. & Vigenina, Denitsa, 2005.
"Key Factors of Joint-Liability Loan Contracts: An Empirical Analysis,"
231, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
- Alexander S. Kritikos & Denitsa Vigenina, 2005. "Key Factors of Joint-Liability Loan Contracts: An Empirical Analysis," Kyklos, Wiley Blackwell, vol. 58(2), pages 213-238, 04.
- Harhoff, Dietmar & Korting, Timm, 1998. "Lending relationships in Germany - Empirical evidence from survey data," Journal of Banking & Finance, Elsevier, vol. 22(10-11), pages 1317-1353, October.
- Constant, Amelie F. & Zimmermann, Klaus F., 2004.
"Self-Employment Dynamics Across the Business Cycle: Migrants Versus Natives,"
IZA Discussion Papers
1386, Institute for the Study of Labor (IZA).
- Amelie Constant & Klaus F. Zimmermann, 2004. "Self-Employment Dynamics across the Business Cycle: Migrants versus Natives," Discussion Papers of DIW Berlin 455, DIW Berlin, German Institute for Economic Research.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- N. Berger, Allen & F. Udell, Gregory, 1998.
"The economics of small business finance: The roles of private equity and debt markets in the financial growth cycle,"
Journal of Banking & Finance,
Elsevier, vol. 22(6-8), pages 613-673, August.
- Allen N. Berger & Gregory F. Udell, 1998. "The economics of small business finance: the roles of private equity and debt markets in the financial growth cycle," Finance and Economics Discussion Series 1998-15, Board of Governors of the Federal Reserve System (U.S.).
- Hillier, Brian & Ibrahimo, M V, 1993. "Asymmetric Information and Models of Credit Rationing," Bulletin of Economic Research, Wiley Blackwell, vol. 45(4), pages 271-304, October.
- Beatriz Armendariz & Jonathan Morduch, 2007. "The Economics of Microfinance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262512017, March.
- Besanko, David & Thakor, Anjan V, 1987. "Collateral and Rationing: Sorting Equilibria in Monopolistic and Competitive Credit Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 28(3), pages 671-89, October.
- Peter E Earl & Jason Potts, 2000. "Latent demand and the browsing shopper," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(3-4), pages 111-122.
- Caliendo, Marco & Kritikos, Alexander S. & Wießner, Frank, 2006.
"Existenzgründungsförderung in Deutschland: Zwischenergebnisse aus der Hartz-Evaluation,"
253, European University Viadrina Frankfurt (Oder), Department of Business Administration and Economics.
- Marco Caliendo & Alexander S. Kritikos & Frank Wießner, 2006. "Existenzgründungsförderung in Deutschland: Zwischenergebnisse aus der Hartz-Evaluation," Working Papers 0006, Gesellschaft für Arbeitsmarktaktivierung (GfA).
- Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
- David G. Blanchflower & Phillip B. Levine & David J. Zimmerman, 1998.
"Discrimination in the Small Business Credit Market,"
NBER Working Papers
6840, National Bureau of Economic Research, Inc.
- David G. Blanchflower & Phillip B. Levine & David J. Zimmerman, 2003. "Discrimination in the Small-Business Credit Market," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 930-943, November.
- J. William Petty & William D. Bygrave, 1993. "What Does Finance Have to Say to the Entrepreneur?," Journal of Entrepreneurial Finance, Pepperdine University, Graziadio School of Business and Management, vol. 2(2), pages 125-137, Spring.
- Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-92, July.
- Vigenina, Denitsa & Kritikos, Alexander S., 2005.
"The individual micro-lending contract: Is it a better design than joint-liability? - Evidence from Georgia,"
Working Paper Series
2005,10, European University Viadrina Frankfurt (Oder), The Postgraduate Research Programme Capital Markets and Finance in the Enlarged Europe.
- Vigenina, Denotes & Kritikos, Alexander S., 2004. "The individual micro-lending contract: is it a better design than joint-liability?: Evidence from Georgia," Economic Systems, Elsevier, vol. 28(2), pages 155-176, June.
- Alexander Kritikos & Frank Wiesner, 2000. "Ein zweiter Kreditmarkt für eine zweite Chance," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 1(3), pages 357-378, 08.
When requesting a correction, please mention this item's handle: RePEc:gfa:wpaper:0003. 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: (Plakatfarbe)
If references are entirely missing, you can add them using this form.