KDI Journal of Economic Policy

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P-ISSN 2586-2995
E-ISSN 2586-4130

Vol.37, No.3

Cite

KDI Journal of Economic Policy. Vol. 37, No. 3, August 2015, pp. 55-74

https://doi.org/10.23895/kdijep.2015.37.3.55

× KDI Open Access is a program of fully open access journals to facilitate the widest possible dissemination of high-quality research. All research articles published in KDI JEP are immediately, permanently and freely available online for everyone to read, download and share in terms of the Creative Commons Attribution 4.0 International License.

Effect of Consulting on Microcredit Repayment in Korea

YOON HAE OH

Author & Article History

Manuscript received 08 May 2015; revision received 19 May 2015; accepted 21 August 2015.

Abstract

This study examines the effect of a one-on-one outsourced pre-lending consulting service on the repayment behavior of microcredit borrowers in Korea with administrative data from the Smile Microcredit Bank. A random change in the cut-off loan amount for mandatory consulting is utilized as an identification strategy. This three-day pre-lending business consulting service is effective in encouraging repayment behavior of existing businesses but it has no significant effect on start-up loans. The effectiveness of the consulting service in deterring delinquency with regard to existing loans is greater among male borrowers than among females.

Keywords

Microcredit, Nonfinancial Service, Consulting, Loan, Repayment, Arrear

JEL Code

D1, G21, J1, L3, N25

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