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Learning By Association: Micro Credit In Chiapas, Mexico

Author

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  • GUSTAVO A. BARBOZA
  • HUMBERTO BARRETO

Abstract

Micro credit programs provide institutional arrangements for low‐income people to transit from nonmarket to market‐oriented settings. This article develops a data set of payment records to determine micro credit participants' behavior on repayment performance. The findings shed new light strongly supporting micro credit as a feasible alternative to successfully provide financial resources to the poor, when controlling for asymmetric information. The empirical evidence indicates that learning by association through peer mentoring is a significant determinant in explaining high repayment rates, whereas peer monitoring is not. (JEL O1, O17, L31, J15)

Suggested Citation

  • Gustavo A. Barboza & Humberto Barreto, 2006. "Learning By Association: Micro Credit In Chiapas, Mexico," Contemporary Economic Policy, Western Economic Association International, vol. 24(2), pages 316-331, April.
    • Handle: RePEc:bla:coecpo:v:24:y:2006:i:2:p:316-331
    DOI: 10.1093/cep/byj020
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    References listed on IDEAS

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    Cited by:

    1. Jordan, Matthew R. & Dickens, William T. & Hauser, Oliver P. & Rand, David G., 2022. "The role of inequity aversion in microloan defaults," Behavioural Public Policy, Cambridge University Press, vol. 6(2), pages 303-324, April.
    2. Gustavo Barboza & Sandra Trejos, 2009. "Micro Credit in Chiapas, México: Poverty Reduction Through Group Lending," Journal of Business Ethics, Springer, vol. 88(2), pages 283-299, September.
    3. Griffin, Denis & Husted, Bryan W., 2015. "Social sanctions or social relations? Microfinance in Mexico," Journal of Business Research, Elsevier, vol. 68(12), pages 2579-2587.
    4. Jeffrey Carpenter & Tyler Williams, 2010. "Moral hazard, peer monitoring, and microcredit: field experimental evidence from Paraguay," Working Papers 10-6, Federal Reserve Bank of Boston.

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    More about this item

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination

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