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| Simtowe, Franklin; Zeller, Manfred; Phiri, Alexander. |
| Moral hazard is widely reported as a problem in credit and insurance markets, mainly arising from information asymmetry. Although theorists have attempted to explain the success of Joint Liability Lending (JLL) schemes in mitigating moral hazard, empirical studies are rare. This paper investigates the determinants of moral hazard among JLL schemes from Malawi, using group level data from 99 farm and non-farm credit groups. Results reveal that peer selection, peer monitoring, peer pressure, dynamic incentives and variables capturing the extent of matching problems explain most of the variation in the incidence of moral hazard among credit groups. The implications are that Joint Liability Lending institutions will continue to rely on social cohesion and... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Moral hazard; Joint liability; Dynamic incentives; Group lending; Malawi; Financial Economics. |
| Ano: 2006 |
URL: http://purl.umn.edu/25287 |
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| Karlan, Dean S.. |
| Lending to the poor is expensive due to high screening, monitoring, and enforcement costs. Group lending advocates believe lenders overcome this by harnessing social connections. Using data from FINCA-Peru, I exploit a quasi-random group formation process to find evidence of peers successfully monitoring and enforcing joint-liability loans. Individuals with stronger social connections to their fellow group members (i.e., either living closer or being of a similar culture) have higher repayment and higher savings. Furthermore, I observe direct evidence that relationships deteriorate after default, and that through successful monitoring, individuals know who to punish and who not to punish after default. |
| Tipo: Working or Discussion Paper |
Palavras-chave: Microfinance; Group lending; Informal savings; Social capital; Institutional and Behavioral Economics; O12; O16; O17; Z13. |
| Ano: 2005 |
URL: http://purl.umn.edu/28522 |
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| Li, Shanjun; Liu, Yanyan; Deininger, Klaus W.. |
| We quantify the importance of peer effects in group lending by estimating a static game of incomplete information. In our model, group members make their repayment decisions simultaneously based on their household and loan characteristics as well as their expectations on other members’ repayment decisions. Exploiting a rich data set of a microfinance program in India, our estimation results suggest that the likelihood of a member making a full repayment would be 15 percent higher on average if all the other follow members make full repayment compared to the case where none of the other members repay in full. We also find that large inconsistencies exist in the estimated effects of other variables in models that do not incorporate peer effects and control... |
| Tipo: Conference Paper or Presentation |
Palavras-chave: Peer effects; Group lending; Joint liability; Self-help groups in India; International Development. |
| Ano: 2009 |
URL: http://purl.umn.edu/49497 |
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| Khawari, Aliya. |
| Poverty alleviation has been the main target of developmental projects world-wide. However, only a few ideas have stirred so much attention in the last two decades as that of the provision of microfinance through specialised institutions. This paper provides a survey of the vast literature that has developed in this field. Though most of the evidence and literature on the subject appears self-praising, nonetheless there is much more to the concept than one can imagine. The establishment of microfinance institutions (MFIs) world-wide for the provision of collateral free loans to the poor through mechanisms and instruments not known to normal commercial banks has set new milestones in the field of financial services. With 900 million households in the less... |
| Tipo: Working or Discussion Paper |
Palavras-chave: Microfinance institutions; Group lending; Sustainability; Target groups; Financial Economics; 012; 016. |
| Ano: 2004 |
URL: http://purl.umn.edu/26394 |
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