z-logo
Premium
Is it better to be mixed in group lending?
Author(s) -
Reito Francesco
Publication year - 2019
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12549
Subject(s) - microfinance , homogeneous , joint and several liability , economics , group (periodic table) , pareto principle , institution , matching (statistics) , microeconomics , liability , econometrics , monetary economics , finance , mathematics , statistics , operations management , economic growth , chemistry , organic chemistry , combinatorics , tort , political science , law
This paper shows that, in a group‐lending scheme with joint liability, a microfinance institution can achieve a Pareto improvement by promoting negative assortative matching among borrowers. The main results are: (i) borrowers may be better off in heterogeneous groups; and (ii) a heterogeneous group equilibrium is possible when individual or homogeneous group equilibria do not exist.

This content is not available in your region!

Continue researching here.

Having issues? You can contact us here