Dropouts,Defaulters, and Continuing Borrowers: Client Exit from Microfinance |
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Authors: | Sarah Pearlman |
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Abstract: | High dropout rates are a problem faced by many microfinance institutions, with borrowers exiting after a few loans. The curiosity of dropouts is that, unlike defaulters, they repay their loans. To understand this I investigate differences across borrowers using data from Zimbabwe. I find that negative shocks are a significant predictor of dropout, but not of default, and that social networks are the most important correlate of on‐time repayment. The results show the importance of social networks in determining credit relationships. |
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Keywords: | Microfinance Default Social networks Africa Zimbabwe D14 O12 O55 |
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