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Microfinance programs are often characterized by progressive lending. A typical borrower receives at first very small amounts, which increase with good repayment conduct. The author rationalizes this feature of microfinance. It is shown that there is a strong tendency to split up projects into subprojects, and that it might be necessary to perform less productive projects first in order to keep pressure on the borrower to repay.
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Dominik Egli (2004) studied this question.
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