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Social loans experiment rated generally successful

Ministry of Social Affairs and Health
Publication date 10.6.2004 10.30
Press release -

A follow-up study just released on the use of social loans finds that though the system is effective more care is needed in how social lending is conducted and monitored.

The study finds that it is not enough to assess the borrowers’ ability to repay the loan and that their willingness to pay should be taken into account. It notes that assessing clients’ willingness to repay social loans is often easier in small municipalities where social workers often know them.

The experiment in providing social loans monitored by the study is seen as generally successful. Only about 6 percent of borrowers were found to be unable to repay their loans.

The study also weighs the risk factors involved in people’s difficulties in repaying social loans. Those receiving social assistance or experiencing long-term unemployment clearly found repayments more of a problem, though the study finds that people on social assistance were usually more successful in repaying the loans than those who had not received social assistance.

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