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Borrower Targeting under Micro-finance Competition with Motivated MFIs


  • Brishti Guha

    () (School of Economics, Singapore Management Unversity)

  • Prabal Roy Chowdhury

    (Indian Statistical Institute)


We examine how increased competition among motivated MFIs impacts the poorest borrowers’ access to microfinance. We find that it depends on inequality, technology and the possibility of double-dipping (borrowing from several sources). Without competition, even a motivated MFI may lend to the not-so-poor in preference to the poor borrowers. If double-dipping is feasible, competition may encourage lending to the poor. The presence of double-dipping is critical for MFI competition to have this positive effect. When double-dipping is feasible, MFI coordination may worsen borrower targeting whenever inequality is intermediate. We discuss policy implications dealing with double dipping, MFI co-ordination and competition.

Suggested Citation

  • Brishti Guha & Prabal Roy Chowdhury, 2012. "Borrower Targeting under Micro-finance Competition with Motivated MFIs," Working Papers 05-2012, Singapore Management University, School of Economics.
  • Handle: RePEc:siu:wpaper:05-2012

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    References listed on IDEAS

    1. Aubert, Cécile & de Janvry, Alain & Sadoulet, Elisabeth, 2009. "Designing credit agent incentives to prevent mission drift in pro-poor microfinance institutions," Journal of Development Economics, Elsevier, vol. 90(1), pages 153-162, September.
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    Cited by:

    1. Guha, Brishti & Chowdhury, Prabal Roy, 2013. "Micro-finance competition: Motivated micro-lenders, double-dipping and default," Journal of Development Economics, Elsevier, vol. 105(C), pages 86-102.
    2. Chowdhury, Shyamal & Chowdhury, Prabal Roy & Sengupta, Kunal, 2014. "Sequential lending with dynamic joint liability in micro-finance," Journal of Development Economics, Elsevier, vol. 111(C), pages 167-180.
    3. Maitra, Pushkar & Mitra, Sandip & Mookherjee, Dilip & Motta, Alberto & Visaria, Sujata, 2017. "Financing smallholder agriculture: An experiment with agent-intermediated microloans in India," Journal of Development Economics, Elsevier, vol. 127(C), pages 306-337.

    More about this item


    Micro-finance competition; motivated MFIs; inequality; borrower targeting; technology.;

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance


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