Stanford Social Innovation Review : Informing and inspiring leaders of social change

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Microfinance

Broken Rules, Better Loans?

Loan officers’ discretion plays a large role in determining the success of a micro-lending organization.

 

Microfinance institutions vary widely when it comes to the success rates of individual branches. Some branches in an organization perform extremely well while others do quite poorly, even when they all serve the same kinds of clients and use the same contracts. What accounts for the difference?

To find out, Rodrigo Canales conducted a research project that covered three well-established microfinance institutions (MFIs) in Mexico. And he learned that individual loan officers are pivotal in...


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