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Public-private partnerships in microfinance: Should NGO involvement be restricted?

  • Jaideep Roy

    ()

    (Brunel University, Uxbridge)

  • Prabal Roy Chowdhury

    ()

    (Indian Statistical Institute, New Delhi)

This paper examines public-private partnerships in micro-finance, whereby NGOs can help in channelizing credit to the poor, both in borrower selection, as well as in project implementation. We argue that a distortion may arise out of the fact that the private partner, i.e. the NGO, is a motivated agent. We find that whenever the project is neither too productive, nor too unproductive, reducing such distortion requires unbundling borrower selection and project implementation, with the NGO being involved in borrower selection only. Further, we compare and contrast two alternative credit delivery mechanisms, the linkage mechanism (which is the focus of this paper), with the `Grameen' one.

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Paper provided by Indian Statistical Institute, New Delhi, India in its series Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers with number 08-11.

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Length: 32 pages
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:ind:isipdp:08-11
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  1. Timothy Besley & Maitreesh Ghatak, 1999. "Public-Private Partnership for the Provision of Public Goods: Theory and an Application to NGOs," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 17, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
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  4. Roy Chowdhury, Prabal, 2007. "Borrower Empowerment and Savings: A Two-stage Micro-finance Scheme," MPRA Paper 3405, University Library of Munich, Germany.
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  11. David Martimort & Flavio Menezes & Myrna Wooders & ELISABETTA IOSSA & DAVID MARTIMORT, 2015. "The Simple Microeconomics of Public-Private Partnerships," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(1), pages 4-48, 02.
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  15. Bebbington, Anthony, 1997. "New states, new NGOs? crises and transitions among rural development NGOs in the Andean region," World Development, Elsevier, vol. 25(11), pages 1755-1765, November.
  16. Kumar Aniket, 2006. "Does Subsidising the Cost of Capital Help the Poorest? An Analysis of Saving Opportunities in Group Lending," ESE Discussion Papers 140, Edinburgh School of Economics, University of Edinburgh.
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