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Microfinance Decision Making: A Field Study of Prosocial Lending

2011; SAGE Publishing; Volume: 48; Issue: SPL Linguagem: Inglês

10.1509/jmkr.48.spl.s130

1547-7193

Jeff Galak, Deborah A. Small, Andrew T. Stephen,

Innovation and Socioeconomic Development

Microfinancing, or small uncollateralized loans to entrepreneurs in the developing world, has recently emerged as a leading contender to cure world poverty. Our research investigates the characteristics of borrowers that engender lending through Kiva, a popular organization that connects individual lenders to borrowers through online microfinance. Lenders favor individual borrowers over groups or consortia of borrowers, a pattern consistent with the identifiable victim effect. They also favor borrowers that are socially proximate to themselves. Across three dimensions of social distance (gender, occupation, and first name initial), lenders prefer to give to those who are more like themselves.