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2014-03-19 - Colloque/Présentation - communication orale - Anglais - 18 page(s)

De Pril Julie , Labie Marc , "Positive vs Negative Incentives for Loan Repayment in Microfinance : A Game Theory Approach" in 5th International Conference on Institutional and Economic Environment for Microfinance, Casablanca, Maroc, 2014

  • Codes CREF : Economie des PVD (DI4375)
  • Unités de recherche UMONS : Economie et gestion de l'entreprise (W742)
  • Instituts UMONS : Institut de Recherche en Développement Humain et des Organisations (HumanOrg)
  • Centres UMONS : Microfinance (CERMI)

Abstract(s) :

(Anglais) In many developing countries, microfinance has grown tremendously over the last twenty years. It did so by providing innovative answers to traditional asymmetries of information that characterize financial markets while establishing at the same time a huge variety of institutions. All together, this evolved into the establishment of a real industry which is simultaneously part of development policies but also more and more of mainstream financial markets. During this process, a lot has been achieved. But at the same time, there are more and more debates about the microfinance industry. One reason is due to (anecdotal) evidences that in some cases, the pressure put by MFIs is so strong and well structured that indeed microfinance customers do repay their loans but only by getting other debts from other sources (family, informal markets, etc.), sometimes resulting into even more problematic situations in term of their well-being. In this paper, we intend to focus on this element and try to see to which extend microfinance development could be maintained or even improved by putting more emphasis on positive incentives rather than on negatives one. We try to model, thanks to game theory, the difference between these two mechanisms regarding clients' condition. This issue seems especially important in this period, microfinance experimenting increasing cases of excessive pressures on borrowers for repayment. Supporting further development of positive incentives in lending methodology represents a key challenge for the future of microfinance.