Microfinance and credit rationing: does the microfinance type matter?

ABSTRACT

This study sets out to examine the extent to which access to credit and credit rationing are influenced by the microfinance type based on the major factors determining micro, small and medium enterprises’ access to credit from microfinance institutions in the era of financial liberalization. The data for the study were gleaned from the microfinance companies’ credit and loan records consisting of the various pieces of information provided by the borrowers in the application process. Our results are puzzling and show that credit rationing is not influenced by the microfinance types but by the individual microfinance companies. Our results also show that the Government microfinance company is the least severe in the rationing behavior.

KEYWORDS:

• Microfinance
• credit rationing
• financial liberalization
• Probit
• Ghana

Disclosure statement

No potential conflict of interest was reported by the authors.