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Microfinance Competition in the Presence of Moneylenders: Theory and Evidence

Shyamal Chowdhury, Prabal Roy Chowdhury, Joeri Smits · 2026 · arXiv (Cornell University)

DOI: 10.48550/arxiv.2610.12186 · cited by 0 works (OpenAlex) · open-access PDF

Korean

수십 년간의 마이크로금융 확장과 높은 이자율을 부과한 후, 마이크로금융 기관 (MFI)과 함께 돈을 빌려주는 사람들은 계속 존재합니다. 우리는 수십 년 후 도덕적 위험을 가진 역동적 인 모델을 개발합니다. MFI 대출자가 생산을 위해 MFI 대출을 사용하여 돈을 빌려주는 사람들에 의존 할 수 있으며 충격을받은 MFIs를 환불하고 MFI 신용에 대한 미래의 접근을 보존 할 수 있습니다. 우리는 MFI 경쟁이 MFI와 돈을 빌려주는 사람들 사이의 공존을 형성하는 방법을 연구합니다. MFI 신용에 대한 경쟁의 효과는 불분명합니다 : 그것은 돈을 빌려주는 사람들을 교환하거나 브리지 대출자로 대체 할 수 있습니다. 대조로, 경쟁은 마

Machine translation (Meta M2M100); the English original follows.

Abstract

After decades of microfinance expansion and despite charging higher interest rates, moneylenders continue to exist alongside microfinance institutions (MFIs). We develop a dynamic model with ex post moral hazard, in which borrowers use MFI loans for production and can rely on moneylenders for bridge loans after shocks to repay MFIs and preserve future access to MFI credit. We then study how MFI competition shapes the coexistence between MFIs and moneylenders. The effect of competition on MFI credit is ambiguous: it may weaken repayment incentives or replace moneylenders as bridge lenders. By contrast, competition unambiguously reduces moneylender credit. In a village-level randomized expansion in Bangladesh, stratified by baseline MFI presence, one additional MFI reduces the number of moneylender loans by roughly 30-40% two to three years later, with no detectable effect on MFI or overall borrowing. This suggests that, in markets where MFIs rely primarily on the threat of exclusion to induce repayment and moneylenders provide emergency finance, gains from additional MFI entry may be greater in less saturated areas.

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Topics: Microfinance, Competition (biology), Incentive, Economics, Monetary economics, Loan

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