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The Evolution away from Joint-Liability Lending in Microfinance

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Title: The Evolution away from Joint-Liability Lending in Microfinance
Author: Burton, James C.
Advisor: Mudd, Shannon
Department: Haverford College. Dept. of Economics
Department: CPGC: Center-sponsored
Type: Thesis (B.A.)
Issue Date: 2011
Abstract: This study of microfinance lending methodologies shows conclusive signs of an evolution in the industry away from joint-liability by comparing the percentage of loans that 454 Microfinance Institutions (MFIs) dedicated toward an “individual” lending methodology over a two-year period. Not only do we show an industry trend, but we also identify organizational and environmental factors that affected movement over the two year period. Findings from a fixed effect regression indicate that a unit rise in average loan size, urban borrowers, and debt to equity ratios positively affects an MFI’s share of individual lending, and thus negatively affect their share of joint-liability loans. We also find that there exists a positive relationship between the age of the industry and greater amounts of individual loans indicating that there has likely been an evolution in the industry towards more individualized lending. In the final part of this paper, we also see preliminary results that indicate a further need for research regarding the effect of loan size on lending methodology.
Subject: Microfinance
Access Restrictions: Open Access
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Burton, James C.. "The Evolution away from Joint-Liability Lending in Microfinance". 2011. Available electronically from

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