Joint Liability Lending In Microcredit Markets With Adverse Selection: A Survey
This 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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Volume (Year): V (2006)
Issue (Month): 2 (May)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Maitreesh Ghatak & Timothy W. Guinnane, 1998.
"The Economics of Lending with Joint Liability: Theory and Practice,"
98-16, University of Copenhagen. Department of Economics.
- Ghatak, Maitreesh & Guinnane, Timothy W., 1999. "The economics of lending with joint liability: theory and practice," Journal of Development Economics, Elsevier, vol. 60(1), pages 195-228, October.
- Ghatak, M. & Guinnane, T.W., 1998. "The Economics of Lending with Joint Liability: Theory and Practice," Papers 791, Yale - Economic Growth Center.
- Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
- Ghatak, Maitreesh, 2000. "Screening by the Company You Keep: Joint Liability Lending and the Peer Selection Effect," Economic Journal, Royal Economic Society, vol. 110(465), pages 601-31, July.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Gangopadhyay, Shubhashis & Lensink, Robert, 2001. "Joint liability lending: a note," Research Report 01E09, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
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