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Enforcement with Costly Group Formation

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Author Info
Prabirendra Chatterjee () (Louisiana State University)
Sudipta Sarangi () (Louisiana State University)

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Abstract

The joint liability literature claims that positive assortative matching, or risk homogeneity, is always the first best solution. We examine this claim in presence of group formation costs and find that the assertion is not always true.

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File URL: http://www.economicsbulletin.com/2005/volume15/EB-04O10003A.pdf
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Publisher Info
Article provided by Economics Bulletin in its journal Economics Bulletin.

Volume (Year): 15 (2005)
Issue (Month): 9 ()
Pages: 1-8
Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Handle: RePEc:ebl:ecbull:v:15:y:2005:i:9:p:1-8

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Related research
Keywords: Formation Costs; Group Lending; Risk Heterogeneity;

Find related papers by JEL classification:
O1 - Economic Development, Technological Change, and Growth - - Economic Development
D8 - Microeconomics - - Information, Knowledge, and Uncertainty

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Ghatak, Maitreesh & Guinnane, Timothy W., 1999. "The economics of lending with joint liability: theory and practice," Journal of Development Economics, Elsevier, vol. 60(1), pages 195-228, October. [Downloadable!] (restricted)
    Other versions:
  2. Van Tassel, Eric, 1999. "Group lending under asymmetric information," Journal of Development Economics, Elsevier, vol. 60(1), pages 3-25, October. [Downloadable!] (restricted)
  3. Lensink, Robert & Mehrteab, Habteab T., 2003. "Risk behaviour and group formation in microcredit groups in Eritrea," Research Report 03E04, University of Groningen, Research Institute SOM (Systems, Organisations and Management). [Downloadable!]
  4. Besley, Timothy & Coate, Stephen, 1995. "Group lending, repayment incentives and social collateral," Journal of Development Economics, Elsevier, vol. 46(1), pages 1-18, February. [Downloadable!] (restricted)
    Other versions:
  5. Park, Albert & Ren, Changqing, 2001. "Microfinance with Chinese Characteristics," World Development, Elsevier, vol. 29(1), pages 39-62, January. [Downloadable!] (restricted)
  6. Sudipta Sarangi & Prabirendra Chatterjee, . "Social Identity and Group Lending," Departmental Working Papers 2004-01, Department of Economics, Louisiana State University. [Downloadable!]
    Other versions:
  7. Jonathan Morduch, 1999. "The Microfinance Promise," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1569-1614, December. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Yan Liu & Guang???Zhen Sun, 2008. "Competition And Access Regulation In The Telecommunications Industry With Multiple Networks," Monash Economics Working Papers 25/08, Monash University, Department of Economics. [Downloadable!]
  2. Dyuti Banerjee & Anupama Sethi, 2008. "Intra-Group Transfers And Group Formation," Monash Economics Working Papers 24/08, Monash University, Department of Economics. [Downloadable!]
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