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KMID : 1124019990150020233
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Korean Social Security Studies
1999 Volume.15 No. 2 p.233 ~ p.252
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Heckman Selection Model Analysis on the Factors Influencing Incomes of the Microcredit Recipients
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Abstract
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The microcredit program is designed to improve self-reliance of the poor families that could create incomes through starting small businesses. Since annually available fund for the microcredit is very limited, screening qualified candidates is the most important factor in improving effectiveness of the program.
This paper analyze the main factor that affects incomes of the microecredit recipients through econometric test on the recipients tracking survey data. The Heckman Selection Model is used in the econometric analysis because the sample consists of recipients who invested loans to the businesses and who misused loan to other purposes than businesses. First equation of the Heckman Selection Model tests the probability of misusing the microcredit by the recipients. The first test shows that recipients who have prior experience in running similar businesses have less probability of misusing the loan. The second equation of the Heckman seletion model estimates business incomes of the recipients. The second test shows that numbers of consulting with government officials and business owners of similar types have positive relationship with the business incomes. It is recommended that more detailed application form for the microcredit should be developed to include former experience, skills, and readiness for starting specific business, By doing so, loans from the microcredit program are more effectively distributed to the more qualified recipients.
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