Youth borrowers improving themselves through endowment loans

Rachel Gordon

doi:10.3362/1755-1986.20-00009

Youth borrowers improving themselves through endowment loans

This paper identifies key factors that explain why some borrowers access credit from microfinance institutions earlier in their lives for productive purposes than other borrowers. Productive credit usage facilitates these youth borrowers to break free from the poverty cycle and increase their initial endowment levels. Examining the differences between borrowers, the results indicate that youths borrowing for investment purposes have higher levels of all types of education. These youth borrowers are more likely able to break a consumption-only borrowing cycle to improve livelihoods. The findings suggest and promote future policy improvements for youth borrowers that intersect education with microlending.

Abed, F.H. and Matin, I. (2007) ‘Beyond lending: how microfinance creates new forms of capital to fight poverty’, Innovations 2(1–2): 3–17 <https://doi.org/10.1162/itgg.2007.2.1-2.3>.

Benell, P. (2007) ‘Promoting livelihood opportunities for rural youth’, IFAD Governing Council Roundtable: Generating Remunerative Livelihood Opportunities for Rural Youth, Knowledge and Skills for Development, Rome.

Donahue, J., James-Wilson, D. and Stark, E. (2006) Microfinance, Youth and Conflict: Central Uganda Case Study, USAID microREPORT #38, United States Agency for International Development, Accelerated Microenterprise Advancement Program (AMAP), Washington, DC.

Holvoet, N. (2004) ‘Impact of microfinance programs on children’s education: do the gender of the borrower and the delivery model matter?’ Journal of Microfinance/ESR Review 6(2): 3.

Hossein, C.S. (2008) Understanding the Impact of Employment, Entrepreneurship and Training Programs on Youth in Jordan and Rwanda, USAID microNOTE #52, United States Agency for International Development Accelerated Microenterprise Advancement Program (AMAP), Washington, DC.

Ledgerwood, E.N. (2013) The New Microfinance Handbook, World Bank, Washington, DC.

Lipton, M. (1993) Growing Points in Poverty Research: Labour Issues, International Institute for Labour Studies, Geneva, Switzerland.

Llisterri, J.J., Kantis, H., Angelelli, P. and Tejerina, L. (2006) Is Youth Entrepreneurship a Necessity or an Opportunity? A First Exploration of Household and New Enterprise Surveys in Latin America, Technical Papers Series, Inter-American Development Bank Sustainable Development Department, Washington, DC.

Making Cents International (2007) Youth Microenterprise and Livelihoods: State of the Field Lessons from the 2007 Global Youth Microenterprise Conference, Making Cents International, Washington, DC.

Maldonado, J.H. and González-Vega, C. (2008) ‘Impact of microfinance on schooling: evidence from poor rural households in Bolivia’, World Development 36(11): 2440–55 <https://doi.org/10.1016/j.worlddev.2008.04.004>.

Maxwell, J. (2002) ‘Entrepreneurship and small business through a multiple level strategy’, presented at the United States Association for Small Business and Entrepreneurship International Conference. 17 January 2002, Reno, NV.

McNulty, M. (2005) Serving Youth with Microfinance: Perspectives of Microfinance Institutions and Youth Serving Organizations, USAID microReport #30, United States Agency for International Development Accelerated Microenterprise Advancement Program (AMAP), Washington, DC.

Nagarajan, G. (2005) Microfinance, Youth and Conflict: Emerging Lessons and Issues, USAID MicroNote #4, United States Agency for International Development Accelerated Microenterprise Advancement Program (AMAP), Washington, DC.

United Nations (2007) World Youth Report 2007: Young People’s Transition to Adulthood: Progress and Challenges, United Nations Department of Economic and Social Affairs, New York.

Zimmerman, F.J. and Carter, M.R. (2003) ‘Asset smoothing, consumption smoothing and the reproduction of inequality under risk and subsistence constraints’, Journal of Development Economics 71: 233–60 <https://doi.org/10.1016/S0304-3878(03)00028-2>.