Relationship lending in microfinance: How does it impact client dropout?

摘要

A close relationship between microfinance loan officers and their clients is essential to avoid the phenomenon of client dropout. Client retention has been identified as a critical factor for both the social performance and the financial sustainability of microfinance institutions. Relationship lending in microfinance decreases the probability of clients dropping out, showing the importance of close contacts between loan officers and their clients. We recommend that microfinance practitioners avoid the rotation of loan officers through different branches when the risk of fraud from loan officers is low.