Female loan clients - a safer bet? : A study of default rates in a microfinance institution.

Abstract

A majority of microfinance institutions (MFIs) in poor countries target women. There have been several suggestions claiming that women are better loan clients, since they take less risk and to a larger degree repay on time. However, there is little empirical evidence for this to be true, and there is no consensus among academics on the impact of microcredit.

The case studied in this thesis is the default rate of loan clients in D-MIRO, one of the largest MFIs in Ecuador. My approach was to look for differences between genders, as this a highly relevant theme in the microfinance world.

Through the method of linear regression I utilized a set of control variables in the attempt to answer my research question: Are female loan clients in D-MIRO less delayed on their loans than men?

There seems to be no statistically significant difference between men and women on the repayment rate. Nonetheless, investigating the differential impact of other variables differences between men and women are found.