Microfinance Decision Making: A Field Study of Prosocial Lending

Galak, Jeff; Small, Deborah; Stephen, Andrew T
October 2011
Journal of Marketing Research (JMR);Oct2011 Supplement 1, Vol. 48, pS130
Academic Journal
Microfinancing, or small uncollateralized loans to entrepreneurs in the developing world, has recently emerged as a leading contender to cure world poverty. Our research investigates the characteristics of borrowers that engender lending through Kiva, a popular organization that connects individual lenders to borrowers through online microfinance. Lenders favor individual borrowers over groups or consortia of borrowers, a pattern consistent with the identifiable victim effect. They also favor borrowers that are socially proximate to themselves. Across three dimensions of social distance (gender, occupation, and first name initial), lenders prefer to give to those who are more like themselves.


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