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Does the Group Leader Affect Repayment Performance Differently?
Author(s) -
Al-Azzam Moh'd,
Heracleous Maria,
Sarangi Sudipta
Publication year - 2013
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.4284/0038-4038-2011.098
Subject(s) - affect (linguistics) , liability , negative binomial distribution , group (periodic table) , set (abstract data type) , business , actuarial science , interpersonal ties , survey data collection , demographic economics , social psychology , economics , psychology , microeconomics , accounting , statistics , mathematics , computer science , chemistry , communication , organic chemistry , poisson distribution , programming language
Theoretical models of group lending assume that all group members are identical in terms of their effect on repayment performance. In practice, however, this may not be true. We use a unique data set obtained from a survey of 160 borrowing groups in Jordan to investigate the impact of joint liability, screening and monitoring activities, and social ties of the group leader and other group members on repayment performance as measured by the intensity of default using a negative binomial II model. Our results suggest that the joint liability and screening activities of the leader are more strongly related to repayment performance than the same variables for the rest of the group members. Social ties of all members have a significant effect on repayment, while monitoring activities have no effect.