Determinants of Microfinance Loan Performance and Fluctuation Over the Business Cycle
Date
2014
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Haverford College. Department of Economics
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Thesis
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Award
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eng
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Open Access
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Abstract
This paper examines fluctuations in microfinance loan performance over the business cycle. Specifically, this paper studies how MFI loan delinquency rates change with variation in yearly GDP growth. Furthermore, this paper also studies the correlation between non-performing loans and GDP according to MFI status as a non- or for-profit organization. The results presented in this paper indicate that MFI loan performance reacts procyclically to the business cycle, although the effect is not as strong as experience by other types of lending institutions. In addition, for-profit MFI loan performance is estimated to be more sensitive to the business cycle than non-profit MFIs.