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Outreach and Mission Drift in Microfinance: An Interpretation of the New Trend

  • Maurizio Caserta

    ()

    (University of Catania)

  • Francesco Reito

    ()

    (University of Catania)

Registered author(s):

    This paper presents a theoretical description of some of the recent developments in the financial programs offered by microfinance institutions (MFIs). We show that even under for-profit MFIs, there is not necessarily a crowding out of the poorest microentrepreneurs, and that MFIs may optimally choose to offer both joint liability contracts (to poor borrowers) and individual liability contracts (to wealthier borrowers).

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    File URL: http://www.accessecon.com/Pubs/EB/2013/Volume33/EB-13-V33-I1-P16.pdf
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    Article provided by AccessEcon in its journal Economics Bulletin.

    Volume (Year): 33 (2013)
    Issue (Month): 1 ()
    Pages: 167-178

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    Handle: RePEc:ebl:ecbull:eb-12-00664
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    1. Van Tassel, Eric, 1999. "Group lending under asymmetric information," Journal of Development Economics, Elsevier, vol. 60(1), pages 3-25, October.
    2. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 2006. "Bank concentration, competition, and crises: First results," Journal of Banking & Finance, Elsevier, vol. 30(5), pages 1581-1603, May.
    3. Francesco Reito, 2011. "Unproductive Investment And Rent Extraction," Bulletin of Economic Research, Wiley Blackwell, vol. 63(3), pages 213-230, 07.
    4. Jonathan Conning & Sergio Navajas & Claudio Gonzalez-Vega, 2003. "Lending Technologies, Competition, and Consolidation in the Market for Microfinance in Bolivia," Economics Working Paper Archive at Hunter College 213, Hunter College Department of Economics.
    5. Beatriz Armendariz & Ariane Szafarz, 2011. "On Mission Drift in Microfinance Institutions," ULB Institutional Repository 2013/97387, ULB -- Universite Libre de Bruxelles.
    6. Madajewicz, Malgosia, 2011. "Joint liability versus individual liability in credit contracts," Journal of Economic Behavior & Organization, Elsevier, vol. 77(2), pages 107-123, February.
    7. de Aghion, Beatriz Armendariz & Gollier, Christian, 2000. "Peer Group Formation in an Adverse Selection Model," Economic Journal, Royal Economic Society, vol. 110(465), pages 632-43, July.
    8. Shubhashis Gangopadhyay & Maitreesh Ghatak & Robert Lensink, 2005. "Joint Liability Lending and the Peer Selection Effect," Economic Journal, Royal Economic Society, vol. 115(506), pages 1005-1015, October.
    9. Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
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