Abstract
AbstractFor microfinance institutions (MFIs) with double bottom line objectives and trade‐offs, the optimal loan size can be determined by using a combination of Markovian Chains with transition probabilities and expected cash flows. Progressive lending may be safe over a range of loan sizes, beyond which a rational borrower would indulge in a strategic default. This range of safe loan sizes may depend on borrower characteristics (risk‐taking, self‐confidence, productivity, interest rates, subsistence needs) and the Microfinance Institution's strategy (financial inclusion objective, progressive lending). MFIs can improve the objective functions by better communication and encouragement of borrowers to increase their confidence in each stage and reassuring them that entrepreneurial failure will not mean being denied a second chance.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
