This research examined the determinants of microcredit loan repayment based on a sample of 752 microcredit loans granted in Portugal by the National Association for the Right to Credit, adopting individual lending mechanisms and granting loans through partnerships with several credit institutions. This is the first study to ascertain the influence that a set of factors – grouped into three categories: borrowers’ individual characteristics; loan characteristics; and characteristics of business projects implemented by borrowers – has on the repayment ability of microcredit programs, in a developed country of the Eurozone experiencing the financial hardships of the 2008-2009 crisis.
Similar to previous studies, married borrowers tend to repay loans faster, an indication that they tend to be more responsible than single borrowers. In addition, the study finds that foreigners tend to default the repayment loans and that those involved in manufacturing activities replay their loans more often than those involved in service activities. The research suggests that microcredit loan repayment depends on both social determinants as well as economic determinants.
Click here to go to the paper by Jorge Mota, António Carrizo Moreira, and Cristóvão Brandão.