Getting Credit to High Return Microentrepreneurs : The Results of an Information Intervention
Small-scale entrepreneurs typically cite access to finance as the most important constraint to growth. Recent randomized experiments have shown the return to capital to be very high for the average microenterprise in Sri Lanka. An intervention was designed to improve access to credit among these hig...
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| Format: | Journal Article |
| Language: | en_US |
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World Bank
2013
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| Online Access: | http://hdl.handle.net/10986/13487 |
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okr-10986-134872021-04-23T14:03:08Z Getting Credit to High Return Microentrepreneurs : The Results of an Information Intervention de Mel, Suresh McKenzie, David Woodruff, Christopher access to credit access to finance business owners credit bureaus credit needs development bank Financial support financial system group lending guarantors interest rate interest rates International Bank loan access loan product loan products microfinance microfinance loan microfinance loans Small-scale entrepreneurs Small-scale entrepreneurs typically cite access to finance as the most important constraint to growth. Recent randomized experiments have shown the return to capital to be very high for the average microenterprise in Sri Lanka. An intervention was designed to improve access to credit among these high-return microenterprises without subsidizing interest rates or requiring group lending. The intervention consisted of information sessions providing details of the microfinance loan product offered by a regional development bank and a reduction from two to one in the number of personal guarantors required for these loans. Ten percent of the microenterprises invited to the information meetings received a new loan, doubling the proportion of firms receiving loans over this period. However, the loans do not appear to be going to particularly high-return firms but rather to firms with more household assets. Many more firms would like loans but are constrained by an inability to find personal guarantors and by other bureaucratic procedures. The results suggest that information alone is unlikely to be enough for most firms and point to the need for credit bureaus that cover microfinance loans and for continuing innovation in loan products that can reach the urban microenterprise sector. 2013-05-21T15:47:31Z 2013-05-21T15:47:31Z 2011-10-18 Journal Article World Bank Economic Review 1564-698X doi:10.1093/wber/lhr023 http://hdl.handle.net/10986/13487 en_US World Bank Economic Review;25(3) CC BY-NC-ND 3.0 IGO http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank World Bank Journal Article Sri Lanka |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
en_US |
| topic |
access to credit access to finance business owners credit bureaus credit needs development bank Financial support financial system group lending guarantors interest rate interest rates International Bank loan access loan product loan products microfinance microfinance loan microfinance loans Small-scale entrepreneurs |
| spellingShingle |
access to credit access to finance business owners credit bureaus credit needs development bank Financial support financial system group lending guarantors interest rate interest rates International Bank loan access loan product loan products microfinance microfinance loan microfinance loans Small-scale entrepreneurs de Mel, Suresh McKenzie, David Woodruff, Christopher Getting Credit to High Return Microentrepreneurs : The Results of an Information Intervention |
| geographic_facet |
Sri Lanka |
| relation |
World Bank Economic Review;25(3) |
| description |
Small-scale entrepreneurs typically cite access to finance as the most important constraint to growth. Recent randomized experiments have shown the return to capital to be very high for the average microenterprise in Sri Lanka. An intervention was designed to improve access to credit among these high-return microenterprises without subsidizing interest rates or requiring group lending. The intervention consisted of information sessions providing details of the microfinance loan product offered by a regional development bank and a reduction from two to one in the number of personal guarantors required for these loans. Ten percent of the microenterprises invited to the information meetings received a new loan, doubling the proportion of firms receiving loans over this period. However, the loans do not appear to be going to particularly high-return firms but rather to firms with more household assets. Many more firms would like loans but are constrained by an inability to find personal guarantors and by other bureaucratic procedures. The results suggest that information alone is unlikely to be enough for most firms and point to the need for credit bureaus that cover microfinance loans and for continuing innovation in loan products that can reach the urban microenterprise sector. |
| format |
Journal Article |
| author |
de Mel, Suresh McKenzie, David Woodruff, Christopher |
| author_facet |
de Mel, Suresh McKenzie, David Woodruff, Christopher |
| author_sort |
de Mel, Suresh |
| title |
Getting Credit to High Return Microentrepreneurs : The Results of an Information Intervention |
| title_short |
Getting Credit to High Return Microentrepreneurs : The Results of an Information Intervention |
| title_full |
Getting Credit to High Return Microentrepreneurs : The Results of an Information Intervention |
| title_fullStr |
Getting Credit to High Return Microentrepreneurs : The Results of an Information Intervention |
| title_full_unstemmed |
Getting Credit to High Return Microentrepreneurs : The Results of an Information Intervention |
| title_sort |
getting credit to high return microentrepreneurs : the results of an information intervention |
| publisher |
World Bank |
| publishDate |
2013 |
| url |
http://hdl.handle.net/10986/13487 |
| _version_ |
1764423604820246528 |