Post on 21-Oct-2014
description
Evalua&ngtheRela&veMeritsofGroupandIndividualLiabilityMicro‐Lending
RBAP/MABSNa&onalRoundtable
Innova&onsforPovertyAc&on
2‐3June2010
Outline
Mo&va&on Defini&ons StudyDesigns Results
• Pros– “Keyinnova&onresponsibleforexpansionofaccessto
credit”(Morduch;ArmendarizdeAghion,Morduch;MicrocreditSummitCampaign2005)
– Addressesmarketfailuresofadverseselec&onandmoralhazard
– Peerpressureimprovesrepayment– Increasedaccesstouncollateralizedloans
• Cons– Tension,harmingsocialnetworks
– Free‐ridingclients– Morecostlytogoodclients;difficulttoa\ractnewclients,
dropoutMo&va&on Defini&ons StudyDesigns Results
GroupLiabilityLoans
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(?)
• Pros– Reducedgrouptension– Preferredproductformany
– Increasedclientreten&onandgrowthasaresult
• Cons– Doesnotaddresspossibilityofadverseselec&onandmoralhazard
– Shi^sburdenofmonitoringandenforcementtocreditofficer
Mo&va&on Defini&ons StudyDesigns Results
IndividualLiabilityLoans
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Groupvs.IndividualLiabilityLoans
Theunansweredques&ons:– Isrepaymentactuallyhigheringroupliabilitythanindividual
liabilitylending?
– Isthereatradeoffintermsofclientbase?
– Howdothesefactorsaffectoverallins&tu&onalprofitability?
IPAandGreenBankdesignedanexperimenttoanswertheseques&ons
Mo&va&on Defini&ons StudyDesigns Results
Liabilityvs.Lending
• Groupliability– Membersareborrowersandguarantors
• Grouplending– Groupstructure– Individualliability
Thisprojecttestsremovalofgroupliability,notofothergroupborrowingcharacteris&cs
Mo&va&on Defini&ons StudyDesigns Results
DefiningProfitability
Profitabilityaskeyins&tu&onaloutcomemeasurement– Repayment
Mo&va&on Defini&ons StudyDesigns Results
– Loansize– Growthofclientbase– Memberreten&on
Evalua&onDesign:ProductCharacteris&cs
• GreenBankBULAKproduct– Womeninruralareas– Twolevelsofliability:group,center– Ini&alloansize:P1000‐P5000– Loanterm:4‐6months
– Weeklycentermee&ngs– Weeklydepositintocenter,group,personalsavingsaccounts
Mo&va&on Defini&ons StudyDesigns Results
Evalua&onDesign:ConversionPhase
• Liabilitystructure– 169exis&ngcentersinLeyte(total)– Randomlyconvertedcentersintoindividualliability– Remaininggroupstructuredidnotchange– Socialinfluencesonrepaymentlikelyremained
• Savings– Dissolvedgroup,centersavings– Personalsavingsremain– Nofundssavedtowardcenterac&vi&es
Becauseallborrowerswerescreenedundergroupliability,isolatesimpactofgroupliabilitypeerpressuretoencouragepayment.
Mo&va&on Defini&ons StudyDesigns Results
Evalua&onDesign:ExpansionPhase
• Liabilitystructure(s)– NewcentersinCebu,Bohol,Panay,Negros– Threeliabilitystructures
1. Group
2. Individual
3. Phased‐inindividual(groupliabilityinthefirstcycleonly)
– Liabilitystructurerandomlyassigned
Doesperformancechangewhenclientsarescreenedintothegroupunderdifferentliabilitystructures?
Mo&va&on Defini&ons StudyDesigns Results
SelectedResults
• Repayment– Nomeasurabledifferenceinrepaymentrates– Trueforbothconversionandexpansionphases
Mo&va&on Defini&ons StudyDesigns Results
SelectedResults:Con&nued
• Dropout– Nosignificantdifferencebetweengroupandindividualliabili&es– Lesslikelytodropoutinphased‐inindividual
• Clientappeal– Individualliabilitycentersa\ractedmoreclients,grewlarger
– Exis&ngcentersconvertedtoindividualliabilitymuchlesslikelytodissolve
• AccountOfficerappeal– AOslesslikelyonaveragetoopencentersinindividual‐liabilityor
phased‐inareasthangroup‐(notsignificantonindividual)
Mo&va&on Defini&ons StudyDesigns Results
SelectedResults:Con&nued
• Timealloca&onofAccountOfficers– Timealloca&ondidnotchangebetweengroupandindividual
centersunderconversionphase
– Duringexpansion,AOsspentmore&me(90minperweek)onrepaymentac&vi&esinindividualliabilitycenterso Shi^in&meawayfromprogramintroduc&on/marke&ng?Consistentwithlowerlikelihoodofestablishingindividualcenters.
– Nodifferencein&mealloca&onbetweenphased‐inindividual&groupcenters
Mo&va&on Defini&ons StudyDesigns Results
SelectedResults:Con&nued
• Centerrela&ons– Reducedmonitoringbypeers(lesslikelytobeabletopredict
defaults)
– Lesssocialcohesion?o AsevidencedbylessspentonChristmaspar&es
• Centercomposi&on– Priormembersmorelikelytoknownewmemberswellunder
individualliability;newmembersnotlikelytoknoweachothero Exis&ngmembersnolongerfearbadrela&onships
– Exis&ngclientswerenotuniformlypro‐individual;somesupplementedloansthroughotherins&tu&onsa^erconversion
Mo&va&on Defini&ons StudyDesigns Results
Results:Summary
• Liabilitystructurehadnoeffectonrepayment
• Individualliabilitycanleadtolargerlendinggroups• Creditofficers
– Lesslikelytoopenindividualliabilitycenters– Spendmore&meonindividualliabilitycenters
o Mightchangewithgreaterexperiencewithindividualliability?
Expandingindividualliabilitylendingproductsmaydeepenoutreachandprovidedesiredflexibilitytoclients
…but,replica&onneededtofurtherunderstandtheseeffects.
Mo&va&on Defini&ons StudyDesigns Results