Loan repayment performance in community development finance institutions in the UK

William K. Derban*, Jane M. Binner, Andy Mullineux

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

This paper identifies the key institutional factors that influence loan loss rates in Community Development Finance Institutions in the UK. Traditional bank credit assessment puts the blame of poor loan performance largely on the borrower. This is the first study of its kind to examine institutional characteristics of 16 CDFIs in the UK and assess their influence on the loan loss rates. The results show that 8 out of the 13 institutional characteristics examined significantly influence loan repayment performance. Although a vast body of literature supports the view that borrower characteristics are highly influential, our results provide strong evidence to show that institutional characteristics are equally important and both factors need to be taken into account if loan repayment performance is to be improved.

Original languageEnglish
Pages (from-to)319-332
Number of pages14
JournalSmall Business Economics
Volume25
Issue number4
DOIs
Publication statusPublished - 1 Nov 2005

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