Demand Side Analysis of Microlending Markets 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. The present study explores customer preferences for microlending products. Among 213 small and micro-business owners 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. 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.
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