In rural communities, banks typically lack adequate information about their customers and often have difficulty enforcing 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 the prospect for banks to operate efficiently and profitably in rural communities. Through numerous mechanisms and strategies, microfinance is changing the way people think about banking in rural communities in developing countries using approaches that provide easy access to loans and repayment. Microfinance offers smaller loans through modest contracts between borrowers and microfinance institutions. Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay In the microfinance framework, group/joint liability lending is lauded and presented as a solution to the challenges of accessing credit and monitoring borrowers, particularly when there is no adequate collateral. To the extent that group liability lending has attracted a great deal of research focus and attention, little has been done on the role of loan officer rotation in the MFI framework with regard to access to credit. Currently, more individual-based lending strategies are gaining relevance in MFIs. literature (Heikkilä, 2011), as collective liability/joint liability is not free from challenges for borrowers 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 also gained greater emphasis in dealing with borrowers. However, little has been done in this regard in relation to the role of loan officer rotation and access to credit, especially in rural areas where information asymmetries are greatest. Previous studies on loan officers and credit access officers such as Uchida et al. (2012) shows that loan officers are crucial in producing soft information about borrowers. Regular loan officer receipts and loan officer rotation result in fewer information productions, whereas more information is produced when a borrower is assigned to a loan officer for an extended period. Loan officers at small banks produce more soft information than their counterparts at large banks because they put more effort into acquiring the necessary information. In a similar study on rotation, Hertzberg et al., (2010) focused on the effect of rotation policy among agents, whereby regular redistribution of tasks to employees can help reduce communication challenges such as suppression/hiding of incorrect information in organizations. The role of loan officers in acquiring soft information from customers cannot be underestimated in the context of microfinance. However, the rotation results were 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 rotation might affect access to credit in urban and rural areas. Please note: this is just an example. Get a personalized document now come on..