Who gets the goodies? An examination of microenterprise credit in Jamaica

This research examines the lending decisions made by microenterprise credit support pro–grammes in Jamaica, focusing on what types of owners of firms successfully obtain loans. Utilizing agency theory, human capital and social capital theories, the study examines what types of borrowers successfully navigate the credit market nurtured by non–governmental orga–nizations (NGOs). It is based on field research comparing five organizations, evaluating the loan process and characteristics of each lender, with a study of their market, utilizing interviews conducted with entrepreneurs of 254 informal sector firms. The study first describes and exam–ines the organizational character of the loan agencies, to discern their effect on the loan granting process. Subsequent analysis examines the characteristics of those individuals who received loans, and compares them with those who did not. The research shows that the behaviour of NGO microenterprise credit institutions in Jamaica conform closely to predictions based on agency theory, behaving very differently from banks, credit unions, informal lending associations and families. Although the bureaucratic mechan–isms and organizational goals and objectives were found to be quite similar among the five different NGO credit agencies studied, each lender varied considerably in their tacit selection criteria of their clientele. The research underscores the importance of social capital and human capital on the lending process.