Abstract
This study analysed the role of trust in informal lending decision-making process. By applying verbal protocol analysis, this paper empirically examined the role of trust and cooperation in lender’s initial reaction to potential lending opportunities, and the lender’s assessment of the intermediary responsible for providing the initial referral of the lending opportunity. The results corroborate earlier findings, and provide sufficient evidence to confirm that about 93 per cent of lending opportunities presented to informal lenders are rejected. It also shows that considerable reliance is placed on the brokers presenting the opportunities. The result also indicates that the dearth of entrepreneurial development in Nigeria is tied implicitly to the instant trust and instant cooperation paradigm.
Highlights
Informal lending institutions and settings constitute a major component of most economies, especially in Sub-Saharan Africa where markets for informal financial products are enormous
This study identified two types of influence that instant trust and instant cooperation can have on entrepreneurial development strategies and prospects in Nigeria
This research examined the trends in the role of instant trust and instant cooperation in lending decisions by informal lenders in Nigeria and the United States of America
Summary
Informal lending institutions and settings constitute a major component of most economies, especially in Sub-Saharan Africa where markets for informal financial products are enormous. In Nigeria, and Africa, as in the United States and parts of Europe, a good number of studies have focused on the role of informal lending and investment directed at entrepreneurial activities (see Ekpo, 1987; Freear, Sohl, & Wetzel, 1996; Mason & Harrison, 1996a). These studies continue to provide empirical evidence to support the presence of informal lending activities, and due to its prescriptive emphasis, exert strong influence on public policy. The last section contains the implications on entrepreneurial development in Nigeria, conclusion, and references
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