A Typology of Criteria used by Microfinance Institutions to Evaluate Potential Microentrepreneurs

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CONFERENCE: Student Research and Creative Activity Fair

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Danthuluri, Anjani Devi
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The purpose of this research is to identify and assess microfinance institution (MFI) loan standards and develop a typology of how MFIs evaluate potential microentrepreneurs for lending micro loans. A knowledge gap exists between microentrepreneurs and MFIs such that potential microentrepreneurs do not know or understand how they are evaluated by MFIs, and that differences exist in evaluation criteria among MFIs. Because the relationship between MFIs and microentrepreneurs is a routine one, this research addresses this issue by providing a coarse-grained typology that helps bridge this knowledge gap so that microentrepreneurs can (1) gain micro loans and (2) entrepreneurship can thrive in the emerging markets in which MFIs operate. To address this issue, interview data were collected from MFI representatives from across the globe. These data were supplemented with information from both scholarly and practitioner-oriented articles. From these data, a typology was developed on the foundations of diverse data and information gathered via methodology discussed above. Comprehensively, the proposed typology bridges the gap between MFIs and microentrepreneurs in an effort to provide understanding that can facilitate entrepreneurship and impact economic growth in emerging markets.