Group lending or individual lending? Evidence from Mongolia

Evidence from Mongolia

Learning about the impact of microcredit is important because the microfinance industry itself is changing. Microfinance institutions across the world are moving from group lending to individual lending. Yet there is not much rigorous evidence showing how these types of microcredit affect borrowers, and this makes it difficult to either substantiate or challenge such a strategic move. This EBRD Impact Brief, prepared by the Office of the Chief Economist, assesses the impact of lending approaches and presents evidence from a recent randomised field experiment in Mongolia.

Microfinance institutions across the world are moving from group lending to individual lending. Yet there is not much rigorous evidence on how these types of microcredit affect borrowers, and this makes it difficult to either substantiate or challenge such a strategic move. This EBRD Impact Brief presents some such evidence from a recent randomised field experiment in Mongolia.