Micronance and Missing Markets
نویسندگان
چکیده
The existing theoretical analysis of micro nance focuses on the nature of the loan contract such as group liability. We draw attention to the role of missing or imperfect labor market in understanding some of the important second generationdebates in micro nance. Our analysis helps explain a number puzzles in micro nance such as (i) high repayment rates with high interest rates, (ii) di¢ culties in scaling up projects, (iii) conicting views about interest rate elasticity of demand for microcredit. The analysis implies that while microcredit can play a vital role when labor markets are underdeveloped, demand for such loans may progressively decline as markets develop. Key Words: Micro nance, Microcredit Puzzles, Labor Market, Missing Markets, High Interest Rate, Scaling Up, Interest Rate Elasticity of Microcredit, Progressive Lending, Structural Change JEL Codes: O12, O16, J23, J43, D13, D 52 1We would like to thank Fahad Khalil, Dilip Mookherjee, Jonathan Morduch, Christopher Udry, Manzur Alam Tipu, Stephen Smith, Imran Matin, Shahid Khandker, Binayak Sen, Arun Malik, Ahmed Saber Mahmud, Tara Sinclair, Bob Goldfarb, Jishnu Das, Don Parsons, Albert Park, Forhad Shilpi for useful discussions and/or comments on earlier drafts. The standard disclaimers apply.
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