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