Productive and unproductive debt spending of microloans taken by urban borrowers (Johannesburg)

Edward and Olsen (2006) explored the existence of three paradigms within the microfinance world of India. It was found that microfinance institutions were moving towards the Financial Sustainability paradigm as opposed to Poverty Alleviation and Women Empowerment. Meyer (2002) showed that there are benefits to differential finance products targeted at borrowers from microlenders. This hung primarily on the purpose or usage of the loan. Weller (2007) defined productive spending as money spent on education and home improvement and consumptive spending as money used for purchasing goods, services or cars. The purpose of this research is to identify whether borrowers of microloans within the Johannesburg region of Gauteng, engaged predominantly in productive debt spending or unproductive debt spending. This information would be useful to bankers to redesign financial products for individuals who spend their loans on productive debt. It was found in the sample that loans were used predominantly for productive debt. The dominant elements were business and education spending. It was also found that women engaged in more productive debt spending than men. This was driven by a greater portion of females investing in businesses and education for themselves and their family.

Grantor dc:publisher

University of Pretoria

Year dc:date.issued

2010

Advisor dc:contributor.advisor

• Jonker, Coenraad

• UCTD
• Microloans

Statement dc:rights

• © 2007 University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria

Dc Identifier Other

G10/191/ag

OAI identifier oai:identifier

oai:repository.up.ac.za:2263/23488