Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/hal/spmain/halshs-03934370.html
   My bibliography  Save this paper

Business Training with a Better-Informed Lender: Theory and Evidence from Microcredit in France

Author

Listed:
  • Renaud Bourlès

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique, IUF - Institut universitaire de France - M.E.N.E.S.R. - Ministère de l'Education nationale, de l’Enseignement supérieur et de la Recherche)

  • Anastasia Cozarenco

    (CERMi - Centre for European Research in Microfinance, MRM - Montpellier Research in Management - UPVD - Université de Perpignan Via Domitia - UM - Université de Montpellier)

  • Dominique Henriet

    (AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique)

  • Xavier Joutard

    (LEST - Laboratoire d'Economie et de Sociologie du Travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique, OFCE - Observatoire français des conjonctures économiques (Sciences Po) - Sciences Po - Sciences Po)

Abstract
In the microfinance sector, experienced lenders enjoy an information advantage over first-time entrepreneurs. Our study proposes an analysis of the business training provided on a par with microloans and its potential effect on borrowers'behavior. First, we present a simple theoretical mechanism showing that an information advantage concerning borrower risk can lead to a non-monotonic relationship between risk and business training provision. Second, using a hand-collected data set of loan applications to a French MFI, we empirically examine the relationship between business training provision and borrower risk, controlling for selection bias and endogeneity. The collected evidence supports the existence of a non-monotonic relationship and shows that business training significantly increases the survival time of loans. Our results are robust to alternative econometric models.

Suggested Citation

  • Renaud Bourlès & Anastasia Cozarenco & Dominique Henriet & Xavier Joutard, 2022. "Business Training with a Better-Informed Lender: Theory and Evidence from Microcredit in France," SciencePo Working papers Main halshs-03934370, HAL.
    • Handle: RePEc:hal:spmain:halshs-03934370
    DOI: 10.2307/48706310
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03934370v1
    as

    Download full text from publisher

    File URL: https://shs.hal.science/halshs-03934370v1/document
    Download Restriction: no
    File URL: https://libkey.io/10.2307/48706310?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Valdivia, Martín, 2015. "Business training plus for female entrepreneurship? Short and medium-term experimental evidence from Peru," Journal of Development Economics, Elsevier, vol. 113(C), pages 33-51.
    2. Anastasia Cozarenco & Ariane Szafarz, 2018. "Gender Biases in Bank Lending: Lessons from Microcredit in France," Journal of Business Ethics, Springer, vol. 147(3), pages 631-650, February.
    3. Bertrand Villeneuve, 2000. "The Consequences for a Monopolistic Insurance Firm of Evaluating Risk Better than Customers: The Adverse Selection Hypothesis Reversed," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 25(1), pages 65-79, June.
    4. D. J. Hand & W. E. Henley, 1997. "Statistical Classification Methods in Consumer Credit Scoring: a Review," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 160(3), pages 523-541, September.
    5. Ulf Axelson, 2007. "Security Design with Investor Private Information," Journal of Finance, American Finance Association, vol. 62(6), pages 2587-2632, December.
    6. Miriam Bruhn & Dean Karlan & Antoinette Schoar, 2018. "The Impact of Consulting Services on Small and Medium Enterprises: Evidence from a Randomized Trial in Mexico," Journal of Political Economy, University of Chicago Press, vol. 126(2), pages 635-687.
    7. DeYoung, Robert & Glennon, Dennis & Nigro, Peter, 2008. "Borrower-lender distance, credit scoring, and loan performance: Evidence from informational-opaque small business borrowers," Journal of Financial Intermediation, Elsevier, vol. 17(1), pages 113-143, January.
    8. repec:dau:papers:123456789/5367 is not listed on IDEAS
    9. Robert Cull & Asli Demirgüç-Kunt & Jonathan Morduch, 2018. "The Microfinance Business Model: Enduring Subsidy and Modest Profit," The World Bank Economic Review, World Bank, vol. 32(2), pages 221-244.
    10. Brière, Marie & Szafarz, Ariane, 2015. "Does Commercial Microfinance Belong to the Financial Sector? Lessons from the Stock Market," World Development, Elsevier, vol. 67(C), pages 110-125.
    11. Signe-Mary McKernan, 2002. "The Impact Of Microcredit Programs On Self-Employment Profits: Do Noncredit Program Aspects Matter?," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 93-115, February.
    12. Kjetil Bjorvatn & Bertil Tungodden, 2010. "Teaching Business in Tanzania: Evaluating Participation and Performance," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 561-570, 04-05.
    13. Renaud Bourlès & Anastasia Cozarenco, 2014. "State intervention and the microcredit market: the role of business development services," Small Business Economics, Springer, vol. 43(4), pages 931-944, December.
    14. Thorsten Beck & Patrick Behr & Andre Guettler, 2013. "Gender and Banking: Are Women Better Loan Officers?," Review of Finance, European Finance Association, vol. 17(4), pages 1279-1321.
    15. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2014. "Business training and female enterprise start-up, growth, and dynamics: Experimental evidence from Sri Lanka," Journal of Development Economics, Elsevier, vol. 106(C), pages 199-210.
    16. Aedín Doris & Donal O’Neill & Olive Sweetman, 2020. "Does Reducing Unemployment Benefits during a Recession Reduce Youth Unemployment?: Evidence from a 50 Percent Cut in Unemployment Assistance," Journal of Human Resources, University of Wisconsin Press, vol. 55(3), pages 902-925.
    17. Roland Bénabou & Jean Tirole, 2005. "Self-Confidence and Personal Motivation," International Economic Association Series, in: Bina Agarwal & Alessandro Vercelli (ed.), Psychology, Rationality and Economic Behaviour, chapter 2, pages 19-57, Palgrave Macmillan.
    18. James Heckman & Rodrigo Pinto & Peter Savelyev, 2013. "Understanding the Mechanisms through Which an Influential Early Childhood Program Boosted Adult Outcomes," American Economic Review, American Economic Association, vol. 103(6), pages 2052-2086, October.
    19. Junichiro Ishida, 2006. "Optimal Promotion Policies with the Looking-Glass Effect," Journal of Labor Economics, University of Chicago Press, vol. 24(4), pages 857-878, October.
    20. repec:bla:jfinan:v:58:y:2003:i:5:p:2059-2086 is not listed on IDEAS
    21. Jacobus de Hoop & Jed Friedman & Eeshani Kandpal & Furio C. Rosati, 2019. "Child Schooling and Child Work in the Presence of a Partial Education Subsidy," Journal of Human Resources, University of Wisconsin Press, vol. 54(2), pages 503-531.
    22. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, September.
    23. Myerson, Roger B, 1983. "Mechanism Design by an Informed Principal," Econometrica, Econometric Society, vol. 51(6), pages 1767-1797, November.
    24. Agier, Isabelle & Szafarz, Ariane, 2013. "Microfinance and Gender: Is There a Glass Ceiling on Loan Size?," World Development, Elsevier, vol. 42(C), pages 165-181.
    25. David McKenzie & Christopher Woodruff, 2014. "What Are We Learning from Business Training and Entrepreneurship Evaluations around the Developing World?," The World Bank Research Observer, World Bank, vol. 29(1), pages 48-82.
    26. Catherine Casamatta, 2003. "Financing and Advising: Optimal Financial Contracts with Venture Capitalists," Journal of Finance, American Finance Association, vol. 58(5), pages 2059-2085, October.
    27. Erwin Bulte & Robert Lensink & Nhung Vu, 2017. "Do Gender and Business Trainings Affect Business Outcomes? Experimental Evidence from Vietnam," Management Science, INFORMS, vol. 63(9), pages 2885-2902, September.
    28. Luminita Postelnicu & Niels Hermes & Ariane Szafarz, 2014. "Defining Social Collateral in Microfinance Group Lending," Palgrave Studies in Impact Finance, in: Roy Mersland & R. Øystein Strøm (ed.), Microfinance Institutions, chapter 10, pages 187-207, Palgrave Macmillan.
    29. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    30. Dean Karlan & Martin Valdivia, 2011. "Teaching Entrepreneurship: Impact of Business Training on Microfinance Clients and Institutions," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 510-527, May.
    31. Roman Inderst, 2008. "'Irresponsible Lending' With A Better Informed Lender," Economic Journal, Royal Economic Society, vol. 118(532), pages 1499-1519, October.
    32. Kasper Roszbach, 2004. "Bank Lending Policy, Credit Scoring, and the Survival of Loans," The Review of Economics and Statistics, MIT Press, vol. 86(4), pages 946-958, November.
    33. de Quidt, Jonathan & Fetzer, Thiemo & Ghatak, Maitreesh, 2016. "Group lending without joint liability," Journal of Development Economics, Elsevier, vol. 121(C), pages 217-236.
    34. S. Brana, 2013. "Microcredit: an answer to the gender problem in funding?," Small Business Economics, Springer, vol. 40(1), pages 87-100, January.
    35. Bauke Visser, 2007. "Motivating Through Delegating Tasks or Giving Attention," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 23(3), pages 731-742, October.
    36. Bédécarrats F (ed & Isabelle (ed.) Guérin & François (ed.) Roubaud, 2020. "Randomized control trials in the field of development : a critical perspective," Post-Print hal-03409465, HAL.
    37. Boyes, William J. & Hoffman, Dennis L. & Low, Stuart A., 1989. "An econometric analysis of the bank credit scoring problem," Journal of Econometrics, Elsevier, vol. 40(1), pages 3-14, January.
    38. David McKenzie, 2021. "Small business training to improve management practices in developing countries: re-assessing the evidence for ‘training doesn’t work’," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 37(2), pages 276-301.
    39. Beatriz Armendáriz & Jonathan Morduch, 2010. "The Economics of Microfinance, Second Edition," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262513986, April.
    40. Daniel Paravisini & Veronica Rappoport & Philipp Schnabl, 2015. "Specialization in Bank Lending: Evidence from Exporting Firms," NBER Working Papers 21800, National Bureau of Economic Research, Inc.
    41. Roman Inderst & Holger M. Mueller, 2006. "Informed Lending and Security Design," Journal of Finance, American Finance Association, vol. 61(5), pages 2137-2162, October.
    42. Beatriz Armendáriz & Ariane Szafarz, 2011. "On Mission Drift in Microfinance Institutions," World Scientific Book Chapters, in: Beatriz Armendáriz & Marc Labie (ed.), The Handbook Of Microfinance, chapter 16, pages 341-366, World Scientific Publishing Co. Pte. Ltd..
    43. Wagner, Charlotte & Winkler, Adalbert, 2013. "The Vulnerability of Microfinance to Financial Turmoil – Evidence from the Global Financial Crisis," World Development, Elsevier, vol. 51(C), pages 71-90.
    44. Miriam Bruhn & Bilal Zia, 2013. "Stimulating managerial capital in emerging markets: the impact of business training for young entrepreneurs," Journal of Development Effectiveness, Taylor & Francis Journals, vol. 5(2), pages 232-266, June.
    45. Aussi Sayinzoga & Erwin H. Bulte & Robert Lensink, 2016. "Financial Literacy and Financial Behaviour: Experimental Evidence from Rural Rwanda," Economic Journal, Royal Economic Society, vol. 126(594), pages 1571-1599, August.
    46. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Bertil Tungodden, 2015. "Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment," Management Science, INFORMS, vol. 61(4), pages 707-722, April.
    47. Charles F. Manski, 1989. "Anatomy of the Selection Problem," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 343-360.
    48. Abbring, Jaap H. & Heckman, James J., 2007. "Econometric Evaluation of Social Programs, Part III: Distributional Treatment Effects, Dynamic Treatment Effects, Dynamic Discrete Choice, and General Equilibrium Policy Evaluation," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 6, chapter 72, Elsevier.
    49. Michela Giorcelli, 2019. "The Long-Term Effects of Management and Technology Transfers," American Economic Review, American Economic Association, vol. 109(1), pages 121-152, January.
    50. Lancaster,Tony, 1992. "The Econometric Analysis of Transition Data," Cambridge Books, Cambridge University Press, number 9780521437899, October.
    51. Schreiner, Mark & Woller, Gary, 2003. "Microenterprise Development Programs in the United States and in the Developing World," World Development, Elsevier, vol. 31(9), pages 1567-1580, September.
    52. Treacy, William F. & Carey, Mark, 2000. "Credit risk rating systems at large US banks," Journal of Banking & Finance, Elsevier, vol. 24(1-2), pages 167-201, January.
    53. L C Thomas & R W Oliver & D J Hand, 2005. "A survey of the issues in consumer credit modelling research," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 56(9), pages 1006-1015, September.
    54. Lars Ivar Oppedal Berge & Armando José Garcia Pires, 2021. "Measuring Spillover Effects from an Entrepreneurship Programme: Evidence from a Field Experiment in Tanzania," Journal of Development Studies, Taylor & Francis Journals, vol. 57(10), pages 1755-1775, October.
    55. Maskin, Eric & Tirole, Jean, 1990. "The Principal-Agent Relationship with an Informed Principal: The Case of Private Values," Econometrica, Econometric Society, vol. 58(2), pages 379-409, March.
    56. Leif Atle Beisland & Bert D’Espallier & Roy Mersland, 2019. "The Commercialization of the Microfinance Industry: Is There a ‘Personal Mission Drift’ Among Credit Officers?," Journal of Business Ethics, Springer, vol. 158(1), pages 119-134, August.
    57. Aakvik, Arild & Heckman, James J. & Vytlacil, Edward J., 2005. "Estimating treatment effects for discrete outcomes when responses to treatment vary: an application to Norwegian vocational rehabilitation programs," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 15-51.
    58. de Bettignies, Jean-Etienne & Brander, James A., 2007. "Financing entrepreneurship: Bank finance versus venture capital," Journal of Business Venturing, Elsevier, vol. 22(6), pages 808-832, November.
    59. Han, Sukjin & Vytlacil, Edward J., 2017. "Identification in a generalization of bivariate probit models with dummy endogenous regressors," Journal of Econometrics, Elsevier, vol. 199(1), pages 63-73.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Emmanuel Tetteh Jumpah & Emmanuel Kojo Tetteh & Abdulai Adams, 2018. "Microcredit repayment among smallholder farmers: what microfinance institutions need to know," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 8(2), pages 74-91, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Renaud Bourlès & Anastasia Cozarenco & Dominique Henriet & Xavier Joutard, 2015. "Business Training Allocation and Credit Scoring: Theory and Evidence from Microcredit in France," AMSE Working Papers 1526, Aix-Marseille School of Economics, France.
    2. Renaud Bourlès & Anastasia Cozarenco & Dominique Henriet & Xavier Joutard, 2015. "Business Training Allocation and Credit Scoring: Theory and Evidence from Microcredit in France," Working Papers CEB 15-030, ULB -- Universite Libre de Bruxelles.
    3. Lucia Dalla Pellegrina & Giorgio Di Maio & Paolo Landoni & Emanuele Rusinà, 2021. "Money management and entrepreneurial training in microfinance: impact on beneficiaries and institutions," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 1049-1085, October.
    4. Erwin Bulte & Robert Lensink & Nhung Vu, 2017. "Do Gender and Business Trainings Affect Business Outcomes? Experimental Evidence from Vietnam," Management Science, INFORMS, vol. 63(9), pages 2885-2902, September.
    5. Lars Ivar Oppedal Berge & Kjetil Bjorvatn & Bertil Tungodden, 2015. "Human and Financial Capital for Microenterprise Development: Evidence from a Field and Lab Experiment," Management Science, INFORMS, vol. 61(4), pages 707-722, April.
    6. Fall, F.S. & Tchakoute Tchuigoua, H. & Vanhems, A. & Simar, L., 2021. "Gender effect on microfinance social efficiency: A robust nonparametric approach," European Journal of Operational Research, Elsevier, vol. 295(2), pages 744-757.
    7. Antonia Grohmann & Lukas Menkhoff & Helke Seitz, 2022. "The Effect of Personalized Feedback on Small Enterprises’ Finances in Uganda," Economic Development and Cultural Change, University of Chicago Press, vol. 70(3), pages 1197-1227.
    8. Suzuki, Aya & Igei, Kengo, 2017. "Can Efficient Provision of Business Development Services Bring Better Results for SMEs?: Evidence from a Networking Project in Thailand," Working Papers 147, JICA Research Institute.
    9. Lucia Dalla Pellegrina & Giorgio, Di Maio & Paolo Landoni & Beatrice Rama, 2019. "Activating women cognitive abilities: Impact of a financial literacy pilot program in India," Working Papers 412, University of Milano-Bicocca, Department of Economics, revised May 2019.
    10. Hubert Tchakoute Tchuigoua, 2023. "Loan officer gender and loan repayment performance. Evidence from greenfield microfinance institutions in Cameroon1," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(2), pages 519-548, June.
    11. Stephen J. Anderson & Rajesh Chandy & Bilal Zia, 2018. "Pathways to Profits: The Impact of Marketing vs. Finance Skills on Business Performance," Management Science, INFORMS, vol. 64(12), pages 5559-5583, December.
    12. Gonzalo Nunez-Chaim & Henry G. Overman & Capucine Riom, 2024. "Does subsidising business advice improve firm performance? Evidence from a large RCT," CEP Discussion Papers dp1977, Centre for Economic Performance, LSE.
    13. Diwan, Faizan. & Makana, Grace. & McKenzie, David & Paruzzolo, Silvia., 2015. "Women business training programme in Kenya : impact of incentives," ILO Working Papers 994874113402676, International Labour Organization.
    14. Gabriela Calderon & Jesse M. Cunha & Giacomo De Giorgi, 2020. "Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico," Economic Development and Cultural Change, University of Chicago Press, vol. 68(2), pages 507-540.
    15. de Mel, Suresh & McKenzie, David & Woodruff, Christopher, 2014. "Business training and female enterprise start-up, growth, and dynamics: Experimental evidence from Sri Lanka," Journal of Development Economics, Elsevier, vol. 106(C), pages 199-210.
    16. Faizan Diwan & Grace Makana & David McKenzie & Silvia Paruzzolo, 2014. "Invitation Choice Structure Has No Impact on Attendance in a Female Business Training Program in Kenya," PLOS ONE, Public Library of Science, vol. 9(10), pages 1-8, October.
    17. Mckenzie,David J., 2020. "Small Business Training to Improve Management Practices in Developing Countries: Reassessingthe Evidence for 'Training Doesn’t Work'," Policy Research Working Paper Series 9408, The World Bank.
    18. Cozarenco, Anastasia & Szafarz, Ariane, 2020. "The regulation of prosocial lending: Are loan ceilings effective?," Journal of Banking & Finance, Elsevier, vol. 121(C).
    19. B. Mak Arvin & Byron Lew (ed.), 2015. "Handbook on the Economics of Foreign Aid," Books, Edward Elgar Publishing, number 15762.
    20. Anastasia Cozarenco & Ariane Szafarz, 2018. "Gender Biases in Bank Lending: Lessons from Microcredit in France," Journal of Business Ethics, Springer, vol. 147(3), pages 631-650, February.

    More about this item

    Keywords

    Business training; Microcredit; Informed lender;
    All these keywords.

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hal:spmain:halshs-03934370. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Contact - Sciences Po Departement of Economics (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.