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Financial Access Under the Microscope

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  • Camelia Minoiu

Abstract

We examine the impact of a large-scale microcredit expansion program on financial access and the transition of previously unbanked borrowers to commercial banks. Administrative data on the universe of loans to individuals show that the program improved access to credit, especially in underdeveloped areas. A sizeable share of first-time borrowers who need a second loan switch from microfinance institutions to commercial banks, which cream-skim low-risk borrowers and grant them larger, cheaper, and longer-term loans. These borrowers are not riskier than those already at commercial banks. The microfinance sector, together with well-functioning credit reference bureaus, help mitigate information frictions in credit markets.

Suggested Citation

  • Camelia Minoiu, 2018. "Financial Access Under the Microscope," NCID Working Papers 05/2018, Navarra Center for International Development, University of Navarra.
    • Handle: RePEc:nva:unnvaa:wp05-2018
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    File URL: http://ncid.unav.edu/en/research/working-papers/wp052018
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    More about this item

    Keywords

    Financial inclusion; microfinance; loan expansion programs; credit reference bureau;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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