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Training services and repayment performance of micro-borrowers in Tunisia.

Authors :
Djelassi, Mariam
Source :
Applied Economics; Apr2024, Vol. 56 Issue 17, p2008-2024, 17p
Publication Year :
2024

Abstract

This paper aims to empirically assess the effectiveness of training services on borrowers' repayment performance in a leading microfinance institution in Tunisia. The two training services analysed are financial education and entrepreneurial coaching. Financial education as basic capital management training does not impact repayment performance. On the other hand, coaching programs to strengthen the technical, managerial, and marketing skills of microentrepreneurs significantly improve repayment performance. These results are obtained through an ordered probit model with endogenous treatment accounting for selection bias and endogeneity problems arising from unobservable factors that influence both the use of training services and repayment quality. These results remain significant after restructuring the sample into more homogeneous borrowers' groups and confirm the hypotheses of the human capital theory. The determinants of training services are also explored. The findings confirm the importance of integrated microfinance strategies, especially in remote rural areas. Combining microcredit with coaching will empower the poor to foster their entrepreneurial skills, productivity, and thus their repayment ability. This study sheds more light on how microfinance institutions can improve their programs in developing countries, which often suffer from a lack of technical and vocational training, the main handicap for transitioning young people to the labour market. [ABSTRACT FROM AUTHOR]

Details

Language :
English
ISSN :
00036846
Volume :
56
Issue :
17
Database :
Complementary Index
Journal :
Applied Economics
Publication Type :
Academic Journal
Accession number :
176165690
Full Text :
https://doi.org/10.1080/00036846.2023.2178629