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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