THE BEHAVIORAL FINANCE AND THE LACK OF REIMBURSEMENT: EMPIRICAL APPLICATION IN THE CASE OF TUNISIAN INSTITUTIONS OF MICROFINANCE

Abstract

The financial intermediary role played by the microfinance institutions (MFIs) reflects that the activity of granting credit is a central banking. For this purpose, the risk of default is not only designed from the side of socioeconomic and demographic characteristics of micro-borrowers, but can be attached to the decision-making process of the loan officer in general and its emotional and cognitive biases in particular. Therefore, the objective of this paper is to understand the degree of influence of behavioral and psychological factors on the defaulting micro-borrowers.  For this, our central research question is: What are the factors that explain the delay in reimbursement related to behavioral and psychological characteristics of loan officers?First, we focus in particular on the factors explaining microfinance loan repayment related to behavioral and psychological characteristics of loan officers. Then, in a second part, we shall summarize and discuss both our sample and methodology adopted to address our research question. Finally, we will try in the third part, to empirically analyze the validity of the pre-discussed ideas in the specific case of microcredit associations in the region of Sfax.