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Volume 39, Number 4, December 2000 >
Please use this identifier to cite or link to this item:
http://purl.umn.edu/54229
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| Title: | Assessing the efficacy of a South African microlender's loan screening mechanism |
| Authors: | Kuhn, M.E.
Darroch, Mark A.G.
Ortmann, Gerald F. |
| Issue Date: | 2000-12 |
| Abstract: | Bivariate probit analysis was used to assess the efficacy of a South African microlender’s loan
screening process. This micro-lender grants short-term cash loans to individuals who are
employed and earning a fixed salary. Loan applicants with more stable incomes, who are
contactable via telephone or post, who are employed in less risky business sectors, who have
more disposable income relative to debt, and who have had a good credit history with other
lenders, are more likely to be accepted. None of the factors with a significant effect on the loan
screening decision could explain subsequent loan default by accepted applicants. The microlender
may have screened out very risky clients and accepted a riskier, profitable pool of loan
applicants with risk being controlled through effective monitoring. This is important where
tangible collateral is unavailable and where the risk must be acceptable to commercial lenders
wanting to link up with profitable micro-lenders. |
| URI: | http://purl.umn.edu/54229 |
| Institution/Association: | Agrekon>Volume 39, Issue 4, December 2000 |
| Total Pages: | 9 |
| From Page: | 699 |
| To Page: | 707 |
| Collections: | Volume 39, Number 4, December 2000
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| 24 _12_ Kuhn, Darroch & Ortmann Dec 2000.pdf | | 104Kb | PDF | View/Open |
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