Karlan, D., & Zinman, J., 2007, Credit Elasticities in Less-Developed Economies: Implications for Microfinance, Thematic Evaluation

2.3 DIRECT ACTIONS IN COMMUNITIES

2.3.5 Micro finance

Recommendation: 1. Take into account substantial insights that can affect microfinance provision success:

• Provision of a broad range of micro finance products including package with diversified interest rates and loan periods
• Women’s specific finance needs and habits at different life cycle moments and in accordance with their physical mobility opportunities (some are able to be more mobile than others)
• Identification of innovative ways of reaching borrowers, especially in remote, rural areas and/or where they have low educations levels.  E.g. example from Malawi where a biometric smart card is used that enables non-literate customers can open and manage a savings account using only their fingerprints for identification.

Reference: Karlan, D., & Zinman, J., 2007, Credit Elasticities in Less-Developed Economies: Implications for Microfinance, Thematic Evaluation, American Economic Review, 98(3): 1040-68 AEAWeb.

Evidence sample: In the design of loan packages to heterogeneous clients including women, innovative ways of meeting client’s needs should be explored, such as by varying interests and loan periods Karlan and Zinman (2007) worked with a South African lender, using randomized interest rate offers to over 50,000 clients. The analysis found that offering different rates and loan conditions had a strong bearing on clients demand for credit. Changing the duration of the loan, affected the size of the loan requested. This would assist women who need a longer duration of loan, dependent on the gestation of the crop.