Repayment behavior in peer-to-peer microfinancing: Empirical evidence from Kiva

Based on a sample of microloans (to individuals and to groups) that were refinanced through the peer-to-peer microfinancing platform Kiva, we study the determinants of the repayment behavior of micro-entrepreneurs whose loans are available to international charitable lenders. We perform binary regressions and account for influential factors such as the time required for funding or the type of entrepreneurial activity. The screening and monitoring quality of the microfinance institution which selects the borrowers is a main driver of credit default. We find evidence that the loan size, the loan term and the length of a possible grace period influence the probability of default. Moreover, women demonstrate better repayment behavior which is, however, not the case for groups of women.