The Role of Credit Officers in the Performance of Micro Loans: Evidence from Brazil

Abstract

This paper studies the role played by credit officers in loan performance. The structural model of credit provision explicitly considers the credit officer's ability at the screening and audit stage. This model is estimated using rich data from VivaCred - a Brazilian NGO. Results suggest that (i) there is substantial heterogeneity among credit officers in the sample; (ii) their ability matters more at screening than at audit stage; and (iii) the estimated ability is correlated with their experience at VivaCred but not with their experience before joining the organization. Evidence suggests that a reduction in staff turnover would be beneficial to the institution.