Geographical Distance and Moral Hazard in Microcredit: Evidence from Colombia
Recent years have seen an intense and critical debate about the impact of microcredit on entrepreneurial activities and poor households' welfare. This paper suggests that information asymmetries in the ex-post loan arrangement between the microfinance institution (MFI) and local borrowers could partially explain the limited impact of microcredit. The physical distance separating borrowers from the MFI could be considered a proxy of agency costs, making monitoring more costly and moral hazard easier. The estimation of the effect of distance on the borrower's self-assessed outcome of a microcredit project in Colombia confirms the presence of moral hazard in the microcredit market, with agency costs increasing with geographical distance.
|Date of creation:||Jan 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +39 071 220 7083
Fax: +39 071 220 7102
Web page: http://sites.google.com/site/mofirunivpm/
More information through EDIRC
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.:
- Manoel Bittencourt, 2010. "Financial Development and Economic Growth in Latin America: Schumpeter is Right!," Working Papers 201014, University of Pretoria, Department of Economics.
- Pietro Alessandrini & Andrea Filippo Presbitero & Alberto Zazzaro, 2008.
"Bank Size or Distance: What Hampers Innovation Adoption by SMEs?,"
Mo.Fi.R. Working Papers
2, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
- Pietro Alessandrini & Andrea F. Presbitero & Alberto Zazzaro, 2010. "Bank size or distance: what hampers innovation adoption by SMEs?," Journal of Economic Geography, Oxford University Press, vol. 10(6), pages 845-881, November.
- Pietro ALESSANDRINI & Andrea PRESBITERO & Alberto ZAZZARO, 2007. "Bank Size or Distance: What Hampers Innovation Adoption by SMEs ?," Working Papers 304, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
- Diamond, Douglas W, 1991. "Monitoring and Reputation: The Choice between Bank Loans and Directly Placed Debt," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 689-721, August.
- Clarke, George R. G. & Cull, Robert & Martinez Peria, Maria Soledad & Sanchez, Susana M., 2002.
"Bank lending to small businesses in Latin America : does Bank origin matter?,"
Policy Research Working Paper Series
2760, The World Bank.
- Clarke, George & Cull, Robert & Martinez Peria, Maria Soledad & Sanchez, Susana M, 2005. "Bank Lending to Small Businesses in Latin America: Does Bank Origin Matter?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 37(1), pages 83-118, February.
- repec:ner:tilbur:urn:nbn:nl:ui:12-3125426 is not listed on IDEAS
- Besley, T. & Coate, S., 1991.
"Group Lending, Repayment Incentives And Social Collateral,"
152, Princeton, Woodrow Wilson School - Development Studies.
- Besley, Timothy & Coate, Stephen, 1995. "Group lending, repayment incentives and social collateral," Journal of Development Economics, Elsevier, vol. 46(1), pages 1-18, February.
- Degryse, Hans & Kim, Moshe & Ongena, Steven, 2009. "Microeconometrics of Banking Methods, Applications, and Results," OUP Catalogue, Oxford University Press, number 9780195340471, March.
- Howard Stein, 2010. "Financial liberalisation, institutional transformation and credit allocation in developing countries: the World Bank and the internationalisation of banking," Cambridge Journal of Economics, Oxford University Press, vol. 34(2), pages 257-273, March.
- Ghatak, M. & Guinnane, T.W., 1998.
"The Economics of Lending with Joint Liability: Theory and Practice,"
791, Yale - Economic Growth Center.
- 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.
- Maitreesh Ghatak & Timothy W. Guinnane, 1998. "The Economics of Lending with Joint Liability: Theory and Practice," Discussion Papers 98-16, University of Copenhagen. Department of Economics.
- Beck, Thorsten & Martinez Peria, Maria Soledad, 2010. "Foreign bank participation and outreach: Evidence from Mexico," Journal of Financial Intermediation, Elsevier, vol. 19(1), pages 52-73, January.
- James Copestake, 2002. "Inequality and the polarizing impact of microcredit: evidence from Zambia's copperbelt," Journal of International Development, John Wiley & Sons, Ltd., vol. 14(6), pages 743-755.
- J. Copestake & S. Bhalotra & S. Johnson, 2001. "Assessing the Impact of Microcredit: A Zambian Case Study," Journal of Development Studies, Taylor & Francis Journals, vol. 37(4), pages 81-100.
- Thorsten Beck & Asli Demirgüç-Kunt & Ross Levine, 2007. "Finance, inequality and the poor," Journal of Economic Growth, Springer, vol. 12(1), pages 27-49, March.
- Demirgüç-Kunt, A. & Beck, T.H.L. & Honohan, P., 2008. "Finance for all? : Policies and pitfalls in expanding access," Other publications TiSEM aec73d3a-d6eb-457f-9182-3, Tilburg University, School of Economics and Management.
- Philip Arestis & Asena Caner, 2009. "Financial liberalization and the geography of poverty," Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 2(2), pages 229-244.
- Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
When requesting a correction, please mention this item's handle: RePEc:anc:wmofir:58. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maurizio Mariotti)
If references are entirely missing, you can add them using this form.