The role of credit officers in the performance of micro loans


  •  The author would like to thank the two anonymous referees, Juliano Assunção, João Manoel Pinho de Mello, Rodrigo Soares, Ana Carla Costa, Marcelo Neri, Marc Labie, Marek Hudon, Ariane Szafarz, and the participants in research seminars at PUC-Rio (Rio de Janeiro, 2009 & 2010), CERMi (Brussels, December 2009) and UQAM (Montréal, January 2011) for helpful discussions and suggestions. The author is grateful to CAPES and FAPERJ in Brazil for granting this research.


This paper proposes a structural model explicitly considering the role played by credit officers in loan performance. The credit officer's ability is decomposed into the screening and the audit stage. This model is estimated using a rich database from VivaCred – a Brazilian NGO. Results suggest that: (i) there is substantial heterogeneity among credit officers in the sample; (ii) their ability affects more the screening than the audit stage; and (iii) their estimated ability is correlated with their experience at VivaCred but not with their experience before joining the organization. Evidence suggests that a reduction in staff turnover would be beneficial to the institution.