Why does the microcredit borrowing rate differ across countries? A cross‐country study

Sofia Pereira (Banco Bilbao Vizcaya Argentaria,Viana do Castelo, Portugal)
Paulo Mourao (Department of Economics, University of Minho, Braga, Portugal)

International Journal of Social Economics

ISSN: 0306-8293

Publication date: 29 June 2012



The purpose of this paper is to study the socio‐economic variables that influence the number of micro‐credit projects worldwide. The paper also intends to study the socio‐economic variables that lead to a higher default rate. In order to do this study, the authors use a database from MIX and include some more variables.


The paper intends to explore why the number of debtors/lenders is higher or lower depending on each country, and what variables influence this behavior. This will allow regions to be distinguished where there is more microcredit and on what basis and why, in some cases, it is found to have a higher incidence of default.


The results showed that green cases (characterized by a lower probability of default) are increased when more collateral value is required and the case is not in Africa. Higher levels of population under the poverty line, higher levels of the Gini Index, and being an African country lead to higher levels of yellow cases. It was observed that the percentage of red cases (characterized by a higher probability of default) tends to rise if there is a smaller value of firms using banks to finance investments, if there is a reduced expression of small firms, and if there are smaller values of collateral needed for a loan.


This is the first scientific paper on this field (heterogeneity of microcredit borrowing rates).



Pereira, S. and Mourao, P. (2012), "Why does the microcredit borrowing rate differ across countries? A cross‐country study", International Journal of Social Economics, Vol. 39 No. 8, pp. 536-550. https://doi.org/10.1108/03068291211238428

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