| Lehner, Maria (17. November 2008): Group versus Individual Lending in Microfinance. Discussion Papers in Economics 2008-24 |
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Microfinance is typically associated with joint liability of group members. However, a large part of microfinance institutions rather offers individual instead of group loans. We analyze the incentive mechanisms in both individual and group contracts. Moreover, we show that microfinance institutions offer group loans when the loan size is rather large, refinancing costs are high, and competition between microfinance institutions is low. Otherwise, individual loans are offered. Interestingly, our analysis predicts that individual lending in microfinance will gain in importance in the future if microfinance institutions continue to get better access to capital markets and if competition further rises.
| Item Type: | Paper (Discussion Paper) |
|---|---|
| Subjects: | Economics Economics > Discussion Papers in Economics Economics > Discussion Papers in Economics > Industrial Organization Economics > Discussion Papers in Economics > Financial Markets Economics > Discussion Papers in Economics > Development Economics Economics > Discussion Papers in Economics > Transition Economics |
| Dewey Classification: | 300 Social sciences 300 Social sciences > 330 Wirtschaft |
| Journal of Economic Literature classification: | F37, G21, G34, L13, O16 |
| URN: | urn:nbn:de:bvb:19-epub-7486-4 |
| Language: | English |
| ID Code: | 7486 |
| Deposited On: | 18. Nov 2008 10:09 |
| Last Modified: | 28. Jun 2010 15:11 |
| References: | microfinance, group lending, individual lending |
