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Full-Text Articles in Behavioral Economics
Why Risk It? The Effect Of Risk And Time Preferences On Microfinance Loan Default, Nike Start
Why Risk It? The Effect Of Risk And Time Preferences On Microfinance Loan Default, Nike Start
Master's Theses
Microfinance is widely recognized as a powerful method for poverty
alleviation. However, little is known about the characteristics of those who
default on their loans. Understanding the behavior of borrowers is an important
component of mitigating adverse selection and the moral hazard of lending. Both
of these concepts embody some of the greatest challenges faced by microfinance
institutions, and they provide the major motivation for this study. Accordingly,
the main objective of this research is to investigate whether non-delinquent
borrowers and delinquent borrowers of a microfinance institution reveal any
difference in their level of risk preference and time preference. This …