Predicting the Default Characteristics of Microfinance Borrowers in Turkey: A Probit Analysis
Eyub Yegen

Abstract
This article is the first complete study that identifies the common idiosyncratic characteristics of defaulted microfinance loans in Turkey by using a probit analysis. The study is based on 104,393 observations from a pooled data that was provided by the Turkish Grameen Microfinance Program (TGMP). Three models were designed and two tests were used in attempting to find the appropriate decision model to identify default. According to the hypothesis test results of the most appropriate model, seventeen variables were highly significant at the one percent level. This probit model may be used by Turkish microfinance institutions as a criterion to identify the likeliness of potential borrowers’ repayments.

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