Repayment of Old Loans through New Loans. Is "Cross-Financing" a Problem for the Grameen Bank?

Abstract

The study analyses the problem and extent of cross-financing in the Grameen Bank system. The main finding is that cross-financing is rarely a problem. However, survey data indicate that long term borrowers, who generally have the highest loan portfolios, turn into irregular borrowers. The study was funded by NORAD. Karin Ask is a social anthropologist and research fellow with the Chr. Michelsen Institute Dr. Arne Wiig is an economist and research fellow with the Chr. Michelsen Institute. Erland Sigvaldsen is a banking consultant with the Nordic Consulting Group.