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Public-private partnerships in micro-finance: Should NGO involvement be restricted?

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  • Roy, Jaideep
  • Chowdhury, Prabal Roy

Abstract

This paper examines public-private partnerships in micro-finance, whereby NGOs can help in channelizing credit to the poor, both in borrower selection, as well as in project implementation. We argue that a distortion may arise out of the fact that the private partner, i.e. the NGO, is a motivated agent. We find that whenever the project is neither too productive, nor too unproductive, reducing such distortion requires unbundling borrower selection and project implementation, with the NGO being involved in borrower selection only. Further, we compare and contrast two alternative credit delivery mechanisms, the linkage mechanism (which is the focus of this paper), with the 'Grameen' one.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Development Economics.

Volume (Year): 90 (2009)
Issue (Month): 2 (November)
Pages: 200-208

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Handle: RePEc:eee:deveco:v:90:y:2009:i:2:p:200-208

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Web page: http://www.elsevier.com/locate/devec

Related research

Keywords: Public-private partnerships Micro-finance Motivated agent NGO Ownership;

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References

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  4. Martimort, David & Pouyet, Jérôme, 2006. "'Build It or Not': Normative and Positive Theories of Public-Private Partnerships," CEPR Discussion Papers 5610, C.E.P.R. Discussion Papers.
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  11. Oliver Hart, 2003. "Incomplete Contracts and Public Ownership: Remarks, and an Application to Public-Private Partnerships," Economic Journal, Royal Economic Society, vol. 113(486), pages C69-C76, March.
  12. Beatriz Armendariz & Jonathan Morduch, 2007. "The Economics of Microfinance," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262512017, January.
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  14. Roy Chowdhury, Prabal, 2007. "Borrower Empowerment and Savings: A Two-stage Micro-finance Scheme," MPRA Paper 3405, University Library of Munich, Germany.
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Citations

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Cited by:
  1. Maurício José Serpa Barros de Moura & Rodrigo de Losso da Silveira Bueno & Helena Wagner P. Rocha & Patricia Morilha Muritiba & Sérgio Nunes Muritiba, 2011. "An analysis of factors affecting the ethical conduct of microcredit officers," Brazilian Business Review, Fucape Business School, vol. 8(1), pages 1-26, January.
  2. Guha, Brishti & Roy Chowdhury, Prabal, 2012. "Micro-finance competition: motivated micro-lenders, double-dipping and default," MPRA Paper 36116, University Library of Munich, Germany.
  3. Kundu, AMIT, 2011. "Savings, lending rate and skill improvement in micro-finance operating through public-private cooperation," MPRA Paper 39247, University Library of Munich, Germany, revised 02 Aug 2011.

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