Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractMicroborrowers may take usurious loans to repay a loan taken from a microfinance institution because of having neglected the time inconsistency of optimal plans or having discounted future payoffs too strongly from the ex-post perspective. Microfinance programs should strive at preventing such consequences of bounded rationality.JEL classification: G21, D91
This paper presents a model of the complete microcredit financing chain investor → MIV → MFI → micro-borrower, in which social-minded MIVs provide funds only to those MFIs which do not exploit their bargaining power towards micro-borrowers. The MFIs with the highest bargaining power do not use MIV capital, since eschewing their market power is most costly for them. Consistent with this prediction of the theoretical model, we find empirically that the net interest margin, as a measure of MFI market power, negatively affects the likelihood of using MIV finance. This lends support to the view that social criteria play an effective role in MIVs' investment policies, thereby also impacting MFIs' lending behavior.
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