We analyze in this paper how various forms of state intervention can impact microfinance institutions’ lending behavior. Using a simple model where entrepreneurs receive individual uncollateralized loans, we show that, not surprisingly, state intervention through the loan guarantee increases...

Research on financial constraints of very small firms is scarce because it is difficult to observe and measure their transactions. Previous studies on small enterprises in post-communist countries have focused either on the effect of financing constraints on business growth (Budina et al., 2000,...

This paper estimates the impact of loan officer subjectivity on microcredit granting by exploiting an exceptionally detailed database from a Brazilian microfinance institution. The loan officers collect field data, meet with applicants, and make recommendations to the credit committee, which has...