Journal ArticleDOI
Group lending under asymmetric information
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TLDR
In this paper, a model and one-period game are introduced to analyze the type of optimal loan contracts that emerge when lenders have less information than borrowers, and it is shown that under imperfect information, lenders may be able to utilize joint liability contracts as a means of screening agent types by inducing endogenous group formation and self-selection among the borrowers.About:
This article is published in Journal of Development Economics.The article was published on 1999-10-01. It has received 205 citations till now. The article focuses on the topics: Joint and several liability & Loan.read more
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Group lending, local information and peer selection
TL;DR: The authors analyzes how group lending programs use joint liability to utilize local information that borrowers have about each other's projects through self-selection of group members in the group formation stage, which leads to positive assortative matching in group formation.
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Microfinance: A Comprehensive Review of the Existing Literature
James C. Brau,Gary M. Woller +1 more
TL;DR: The authors provide a comprehensive review of over 350 articles and address the issues of MFI sustainability, products and services, management practices, clientele targeting, regulation and policy, and impact assessment.
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Microfinance in Northeast Thailand: Who Benefits and How Much
TL;DR: In this paper, the authors evaluate the impact of two micro-finance programs in Thailand, controlling for endogenous self-selection and program placement, and find that the wealthier villagers are significantly more likely to participate than the poor.
Journal ArticleDOI
Screening by the Company You Keep: Joint Liability Lending and the Peer Selection Effect
TL;DR: This paper showed that joint-liability lending contracts, similar to those used by credit cooperatives and group-lending schemes, induce endogenous peer selection in the formation of groups in a way that the instrument of joint liability can be used as a screening device to exploit this local information.
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The effect of social capital on group loan repayment: evidence from field experiments*
TL;DR: In this article, the authors present evidence that personal trust between group members and social homogeneity are more important to group loan repayment than general societal trust or acquaintanceship between members, and they also find some evidence of reciprocity: those who have been helped by other group members in the past are more likely to contribute in the future.
References
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Journal ArticleDOI
Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information
TL;DR: The authors analyzes competitive markets in which the characteristics of the commodities exchanged are not fully known to at least one of the parties to the transaction, and suggests that some of the most important conclusions of economic theory are not robust to considerations of imperfect information.
Journal ArticleDOI
Peer Monitoring and Credit Markets
TL;DR: In this paper, a simple model of peer monitoring in a competitive credit market is presented, where the transfer of risk from the bank to the cosigner leads to an improvement in borrowers' welfare.
Journal ArticleDOI
Group lending, repayment incentives and social collateral
Timothy Besley,Stephen Coate +1 more
TL;DR: In this paper, the authors investigate the impact on repayment rates of lending to groups which are made jointly liable for repayment, and show that successful group members may have an incentive to repay the loans of group members whose projects have yielded insufficient return to make repayment worthwhile.
Journal ArticleDOI
Coalition-Proof Nash Equilibria I. Concepts
TL;DR: In this article, the authors provide a stronger definition of self-enforceability, and label the class of efficient self-ensforcing agreements "coalition-proof" for non-cooperative games.