Joint Liability Lending In Microcredit Markets With Adverse Selection: A Survey
AbstractThis article reviews recent literature on joint liability lending in micro-credit markets characterized by adverse selection. This mode of lending consists of granting individual loans to wealthless borrowers provided that they form groups. If a group does not fully repay its obligations, then the microlender cuts off all members from future credit until the debt is repaid. Joint liability lending is able to extract information through a peer selection mechanism, with the effect of raising both repayment rates and welfare with respect to individual lending.
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Bibliographic InfoArticle provided by IUP Publications in its journal The IUP Journal of Bank Management.
Volume (Year): V (2006)
Issue (Month): 2 (May)
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Other versions of this item:
- Alessandro Fedele, 2006. "Joint Liability Lending in Microcredit Markets with Adverse Selection: a Survey," Working Papers 20060901, Università degli Studi di Milano-Bicocca, Dipartimento di Statistica, revised Sep 2006.
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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- Kundu, AMIT & MITRA, SURANJANA, 2009. "Determinants Influencing a Rural Household's Preference to Join Individual Liability or Joint Liability Micro Credit Contract Operated by Primary Aagricultural Credit Society," MPRA Paper 21784, University Library of Munich, Germany, revised 10 Oct 2009.
- Abdelhamid, El Bouhadi & Omar, Essardi, 2007.
"Micro-microcrédit et asymétries d’information : cas du Maroc
[INFORMATION asymmetries and microcredit: The Moroccan case]," MPRA Paper 20080, University Library of Munich, Germany.
- Alessandro Fedele & Federica Calidoni Lundberg, 2006.
"Technology Replaces Culture in Microcredit Markets: the Case of Italian MAGs,"
20060902, Università degli Studi di Milano-Bicocca, Dipartimento di Statistica, revised Sep 2006.
- Calidoni-Lundberg, Federica & Fedele, Alessandro, 2007. "Technology Replaces Culture in Microcredit Markets: the Case of Italian MAGs," AICCON Working Papers 46-2007, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
- F. Calidoni-Lundberg & A. Fedele, 2006. "Technology replaces culture in microcredit markets: the case of Italian MAGs," Economics Department Working Papers 2006-EP11, Department of Economics, Parma University (Italy).
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