In this paper we use data from a field experiment which randomized client assignment to a weekly or monthly repayment schedule and find no significant effect of type of repayment schedule on client delinquency or default.From "Repayment Frequency and Default in Microfinance: Evidence from India" by Erica Field and Rohini Pande. The full version is available here.
Weekly repayment schedules are a standard feature among nearly all non-SHG microfinance lending in India. Borrowers have never really liked taking an hour out each week to attend group meetings, but MFIs have been reluctant to decrease the frequency of group meetings out of a fear that doing so would lead to a drop in the fiscal discipline of borrowers and, consequently, of repayments. This paper proves that in the case of the MFI the researchers worked with, VWS, these fears are misplaced: borrowers repaid their loans just as well even if they met only monthly.
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