JOURNAL ARTICLE

Monitoring and Loan Pricing: Do Microfinance Institutions Extract Rents from Entrepreneurs?

  • Published In: Quarterly Journal of Finance, 2024, v. 14, n. 3. P. 1 1 of 3

  • Database: Business Source Ultimate 2 of 3

  • Authored By: Shahriar, Abu Zafar M; Unda, Luisa A.; Berns, John P.; Phatraphumpakdee, Panunya 3 of 3

Abstract

Microfinance institutions (MFIs) have been criticized for charging high interest rates on loans. Building on multiple-principal agency theory, we argue that when an MFI acquires proprietary information about its clients through monitoring, it gains an information advantage over other lenders enabling it to extract rents by charging higher interest rates. Using data from 712 MFIs across 62 countries from 2010 to 2018, we find this to be the case. Furthermore, we find that MFIs that make more relationship-based loans, operate in less competitive markets, and those driven by for-profit commercial banking logic are more likely to extract even greater rents. [ABSTRACT FROM AUTHOR]

Additional Information

  • Source:Quarterly Journal of Finance. 2024/09, Vol. 14, Issue 3, p1
  • Document Type:Article
  • Subject Area:Business and Management
  • Publication Date:2024
  • ISSN:2010-1392
  • DOI:10.1142/S2010139224500113
  • Accession Number:181284584
  • Copyright Statement:Copyright of Quarterly Journal of Finance is the property of World Scientific Publishing Company and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)

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