To switch or not to switch - Can individual lending do better in microfinance than group lending?
These days it has been witnessed, that banks other individual loans instead of group loans and develop products based on individual liability in developing coun- tries. In order to study this surprising turn, we expand the conventional approach on decision making of individuals. A social prestige function is introduced that re- Â‡ects the non-monetary impacts of group membership on the individual and on her decisions. If a borrower possesses more than a critical level of wealth, it is optimal for her to switch to individual borrowing. From a welfare perspective, a mixture of individual and group loans is desirable. However, the average borrower switches from group to individual lending too soon.
|Date of creation:||07 Mar 2011|
|Date of revision:||07 Mar 2011|
|Contact details of provider:|| Postal: |
Phone: +49 6131 39-22223
Web page: http://wiwi.uni-mainz.de/index.html
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:jgu:wpaper:1106. 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: (Lehrstuhl Wälde)
If references are entirely missing, you can add them using this form.