Microfinance and markets: New results for the Besley-Coate group lending model
AbstractMicrofinance currently experiences a huge inflow of private investors and a surge in the use of market instruments. This raises the question of what market equilibria in microfinance markets look like and which kinds of market failure tend to afflict them. The present paper conducts an equilibrium analysis of Besley and Coate’s (1995) group lending model with enforcement problems.We show that a consideration of repayment rates alone is not sufficient to predict market outcomes, as it is biased towards group lending. Market equilibria are likely to exhibit the same kinds of market failure as equilibria in adverse selection models, viz., financial fragility, redlining, and credit rationing. Social sanctions ameliorate these problems, but do not eliminate them.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Regensburg, Department of Economics in its series University of Regensburg Working Papers in Business, Economics and Management Information Systems with number 430.
Date of creation: 28 Jan 2009
Date of revision:
Contact details of provider:
Postal: Universitäts-Str. 31, D-93040 Regensburg
Phone: +49 941 943-2392
Fax: +49 941 943-4752
Web page: http://www-wiwi.uni-regensburg.de/
More information through EDIRC
microfinance; group lending; enforcement;
Other versions of this item:
- Lutz Arnold & Johannes Reeder & Susanne Steger, 2009. "Microfinance and markets: New results for the Besley-Coate group lending model," Working Papers, Bavarian Graduate Program in Economics (BGPE) 067, Bavarian Graduate Program in Economics (BGPE).
- G - Financial Economics
You can help add them by filling out this form.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gernot Deinzer).
If references are entirely missing, you can add them using this form.