Loan size growth and sustainability in village banking programmes
Authors: MkNelly, Barbara; Stack, Kathleen E.
Source: Small Enterprise Development, 1 June 1998, vol. 9, no. 2, pp. 4-16(13)
Abstract:This article examines why the size of average loans in two Latin American village banks has not grown as much as was anticipated – and hoped for. It emerges that some of the demand for credit is met by the village banks' 'internal fund', which reduces the amount that is sought from programme funds. There is also a high level of membership turnover in the bank's early years, contributing to a large proportion of new borrowers with small loans. The article describes new measures to increase membership loyalty and borrowing from programme funds, including greater flexibility in repayments and savings-only accounts. It also recommends training poor borrowers in rural areas to make better use of their working capital.
Document Type: Research Article
Publication date: 1998-06-01T00:00:00