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IS THE CREDIT WORTH IT? FOR‐PROFIT LENDERS IN MICROFINANCE WITH RATIONAL AND BEHAVIORAL BORROWERS
Author(s) -
QUIDT Jonathan,
GHATAK Maitreesh
Publication year - 2018
Publication title -
annals of public and cooperative economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.526
H-Index - 37
eISSN - 1467-8292
pISSN - 1370-4788
DOI - 10.1111/apce.12189
Subject(s) - microfinance , profit (economics) , economics , microeconomics , perfect competition , for profit , monetary economics , finance , economic growth
The bulk of the literature on microcredit has focused on either not‐for‐profit lenders or assumes a perfectly competitive, zero‐profit market equilibrium. Yet the market has experienced a significant shift toward for‐profit lending and the assumptions of perfect competition are likely to be too strong in many locations. We review the state of the literature on for‐profit lending in microcredit, consider its implications for both conventionally ‘rational’ borrowers and for borrowers with behavioral biases, and point out directions for future research.