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Abstract
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 |
|---|---|
| Form of publication: | Submitted Version |
| Faculties: | Economics Economics > Munich Discussion Papers in Economics Economics > Munich Discussion Papers in Economics > Industrial Organization Economics > Munich Discussion Papers in Economics > Financial Markets Economics > Munich Discussion Papers in Economics > Development Economics Economics > Munich Discussion Papers in Economics > Transition Economics Economics > Chairs > Seminar for Comparative Economics |
| Subjects: | 300 Social sciences > 300 Social sciences, sociology and anthropology 300 Social sciences > 330 Economics |
| JEL Classification: | F37, G21, G34, L13, O16 |
| URN: | urn:nbn:de:bvb:19-epub-7486-4 |
| Language: | English |
| Item ID: | 7486 |
| Date Deposited: | 18. Nov 2008, 09:09 |
| Last Modified: | 05. Nov 2020, 16:35 |
| References: | microfinance, group lending, individual lending |
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