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The Invisible Collateral

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  • Muduli, Silu
  • Dash, Shridhar Kumar

Abstract

A borrower may hesitate to borrow from her close relatives and family members as it costs them in terms of reduction in social insurance in the case of default. This invisible cost reduces credit risk. India’s household indebtedness survey shows some evidence on these borrowing preferences. This perspective on borrowing decisions derived from the community can be used as one of the dimensions in credit risk evaluation and in policy formulation.

Suggested Citation

  • Muduli, Silu & Dash, Shridhar Kumar, 2019. "The Invisible Collateral," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 54(48), pages 13-16.
    • Handle: RePEc:zbw:espost:208372
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    File URL: https://www.econstor.eu/bitstream/10419/208372/1/The_Invisible_Collateral.pdf
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    References listed on IDEAS

    as
    1. Dean Karlan & Markus Mobius & Tanya Rosenblat & Adam Szeidl, 2009. "Trust and Social Collateral," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(3), pages 1307-1361.
    2. Samuel Lee & Petra Persson, 2016. "Financing from Family and Friends," The Review of Financial Studies, Society for Financial Studies, vol. 29(9), pages 2341-2386.
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    Cited by:

    1. Muduli, Silu & Sharma, Manu, 2022. "Loan Repayment Dynamics of Self-Help Groups in India," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 16(2), pages 183-202.

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    Keywords

    Network; Trust; Credit Risk;
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