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Group Lending or Individual Lending? Evidence from a Randomized Field Experiment in Rural Mongolia

Author

Listed:
  • Attanasio, O.P.
  • Augsburg, B.
  • de Haas, R.

    (Tilburg University, Center For Economic Research)

  • Fitzsimons, E.
  • Harmgart, H.

Abstract

Abstract: We present evidence from a randomized field experiment in rural Mongolia on the comparative poverty impact of group versus individual microcredit. We find a positive impact of group loans but not of individual loans on entrepreneurship and food consumption. Moreover, group borrowers are less likely to make informal transfers to families and friends while the opposite holds true for individual borrowers. This suggests that joint liability may deter borrowers from using loans for non-investment purposes with stronger impacts as a result. We find no difference in repayment rates between both types of microcredit.

Suggested Citation

  • Attanasio, O.P. & Augsburg, B. & de Haas, R. & Fitzsimons, E. & Harmgart, H., 2013. "Group Lending or Individual Lending? Evidence from a Randomized Field Experiment in Rural Mongolia," Discussion Paper 2013-074, Tilburg University, Center for Economic Research.
  • Handle: RePEc:tiu:tiucen:9b25be04-b209-490a-86b3-7bcc017fd82a
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    References listed on IDEAS

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    More about this item

    Keywords

    Microcredit; poverty; randomized field experiment;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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