In rural communities, banks typically have insufficient information about their customers and often struggle to enforce loan agreements. Borrowers, for their part, regularly lack sufficient collateral or credit ratings to secure loans from commercial banks. High transaction costs, adverse selection, and moral hazard, coupled with small transaction sizes, limit banks' chances of operating efficiently and profitably in rural communities. Through many mechanisms and strategies, microfinance is changing the way of thinking about banking in rural communities in developing countries by using approaches that facilitate access to loans and repayment. Microfinance offers minor loans through modest contracts between borrowers and microfinance institutions. Say no to plagiarism. Get a tailor-made essay on “Why violent video games should not be banned”? Get an original essay In the context of microfinance, group lending/joint liability is hailed and presented as a solution to problems of access to credit and monitoring of borrowers, particularly when there is no adequate collateral. To the extent that group lending has attracted much research attention and focus, little has been done on the role of loan officer turnover within MFIs in access to credit. Currently, more individual lending strategies are gaining relevance in MFIs. (Heikkilä, 2011), as collective liability/joint liability is not immune to borrower challenges such as collusion and free riding, as suggested by Gine et al. (2010). As the role of individual lending approaches becomes popular among MFIs, the role of loan officers has gained importance in dealing with borrowers. However, little has been done in this regard regarding the role of loan officer turnover and access to credit, particularly in rural areas where information asymmetries are greater. Previous studies on loan officers and access to credit, such as those by Uchida et al. (2012) shows that loan officers play a crucial role in producing informal information about borrowers. Regular loan officer income and loan officer turnover result in less information production, while more information is produced when a borrower is assigned to a single loan officer for a long period of time. Loan officers at small banks produce more informal information than their counterparts at large banks because they make more effort to acquire the necessary information. In a similar study on rotation, Hertzberg et al. (2010) focused on the effect of turnover policy among banks. agents, whereby regular reassignment of tasks to employees can help reduce communication issues such as deletion/hiding of wrong information in organizations. The role of loan officers in acquiring informal information from clients cannot be underestimated in the microfinance context. However, the results of rotation have been ambivalent and inconclusive as Hertzberg et al. (2010), Bhowal et al. (2013) and Uchida et al. (2012) share different experiences. We build on this knowledge by exploring how loan officer turnover might influence access to credit in urban and rural areas. Keep in mind: this is just a sample. Get a personalized item now..