Multiple borrowing and adverse selection in credit markets

Tassel, Eric Van

doi:10.1093/oep/gpx038

Cited by 2 publications

(1 citation statement)

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“…More recently, the issue of multiple borrowing has become rampant in the microfinance industry, thus calling for the dire attention of practitioners and researchers (Lascelles and Mendelson, 2012; Mia, 2017). Generally, multiple borrowing signifies simultaneous acquisition of loans from more than one financial institution (Van Tassel, 2017). While we remain neutral on the effect of multiple borrowing on microfinance beneficiaries [1], the existing literature seems to be skewed toward its negative effect.…”

Section: Introductionmentioning

confidence: 99%

Factors affecting multiple borrowing among microfinance clients: evidences from Bangladesh

Ali

Mia

Azman

et al. 2022

APJBA

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PurposeAlthough microfinance had experienced rapid growth in most developing economies, multiple borrowing remains a growing concern for practitioners and researchers in recent years. Hence, the main purpose of the study is to evaluate the factors affecting multiple borrowing among microfinance clients.Design/methodology/approachThe primary survey data of 400 microfinance clients from Bangladesh was collected to execute the research objective. Considering the types of dependent variable, this study employed logistics, probit, ordinary least squares (OLS) and Poisson regression techniques to analyze the data.FindingsAmong others, it was discovered that the expected (requested) loan amount is positively associated with multiple borrowing, while the level of training, small cattle farming business and marital status (widow/separated) exhibited negative effects under logistic regression. These results are robust with respect to the regression method, the specification and the definition of the outcome variable. Also, supply-side incentives (e.g. training) were found to partly influence the multiple-borrowing behavior of microfinance clients. These findings reiterate the contribution of both demand and supply-side factors to the multiple-borrowing behavior of clients. Consequently, policy implications and future research direction are advanced.Originality/valueThe authors have examined some individual-level characteristics as well as some supply-side incentives to better understand the underexplored issue of multiple-borrowing behavior among microfinance clients.

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Section: Introductionmentioning

confidence: 99%