Credit portal




Microfinance meaning and definition

microfinance meaning and definition


With over-indebtedness emerging among microfinance customers, the industry's sustainability and social impact are at risk. Filling a void in the literature, this paper develops a definition of over-indebtedness that is appropriate for customer protection purposes. It provides a framework for the causes of over-indebtedness that highlights the role of external influences and the responsibility of lenders. It recognises the role borrowers play in their own over-indebtedness. This paper challenges several misconceptions and oversimplifications about microfinance over-indebtedness. These include the belief that default-based risk management indicators are sufficient to signal concerns in relation to customer protection. Further misconceptions are the undesirability of consumption loans, as well as the benefits of competition, of regular instalment schedules, of a zero-tolerance policy and of annual percentage rates. By enhancing our understanding of microfinance over-indebtedness and its causes, this paper provides the means for measuring over-indebtedness and tailoring solutions to its root causes. The analysis shows that combating over-indebtedness does not automatically mean reducing access to microcredit. Although a soundevaluation of repayment capacity is essential, tailoring products to clients' needs also reduces over-indebtedness.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may

be large. File URL:

Download Restriction: Access to full text is restricted to subscribers.



When requesting a correction, please mention this item's handle: RePEc:taf:oxdevs:v:41:y:2013:i:sup1:p:s95-s116. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Michael McNulty)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

Category: Payday loans

Similar articles: