Do Microloan Officers Want to Lend to the Less Advantaged? Evidence from a Choice Experiment

SummaryThe mission of microfinance is generally perceived as compensation for the failure of the mainstream financial institutions to deliver access to finance to the poor. Microloan officers are central players in microloan origination process. We conduct a choice experiment in Burundi, one of the poorest countries in the world, to determine whether the poorer and more deprived are indeed given preference by microloan officers. The results suggest that the less advantaged individuals have just slightly higher chances of being granted a loan. Surprisingly, we find very little difference between the preferences of microloan officers of nonprofit and for-profit MFIs.

► Microloan officers in Burundi only slightly favor the less advantaged.
► Main determinants for loan allocation are related to the quality of business projects.
► Microloan officers from pro-social and profit-seeking MFIs differ only a little.
► Incentives to officers are rarely used in Burundi.
► Officers seem to respond to incentives by allocating more loans to targeted groups.