Thanks to Fulbright IIE for research funding and to Joanitah Kirunda, Robert Apell and the staff of FINCA Uganda for invaluable assistance with gathering and entering data.
How Rising Competition Among Microfinance Institutions Affects Incumbent Lenders†
Article first published online: 31 OCT 2005
The Economic Journal
Volume 115, Issue 506, pages 987–1004, October 2005
How to Cite
McIntosh, C., de Janvry, A. and Sadoulet, E. (2005), How Rising Competition Among Microfinance Institutions Affects Incumbent Lenders. The Economic Journal, 115: 987–1004. doi: 10.1111/j.1468-0297.2005.01028.x
- Issue published online: 31 OCT 2005
- Article first published online: 31 OCT 2005
- Submitted: 15 July 2003 Accepted: 16 November 2004
This article uses data from Uganda's largest incumbent microfinance institution to analyse the impact of entry by competing lenders on client behaviour. We observe that rising competition does not lead to an increase in client dropout rate, but induces a decline in repayment performance and savings deposited with the incumbent, suggesting rising multiple loan-taking by clients. This joint effect on dropout and repayment is consistent with some negative information about clients and is being shared across lenders. However, the observed decline in repayment rates in a context of rising multiple loan-taking shows that information sharing about clients is far from complete.