Maria Lehner: Group versus Individual Lending in Microfinance Group Lending versus Individual Lending in Micro…nance
نویسنده
چکیده
Micro nance is typically associated with joint liability of group members. However, a large part of micro nance institutions rather o¤ers individual instead of group loans. We analyze the incentive mechanisms in both individual and group contracts. Moreover, we show that micro nance institutions o¤er group loans when the loan size is rather large, re nancing costs are high, and competition between micro nance institutions is low. Otherwise, individual loans are o¤ered. Interestingly, our analysis predicts that individual lending in micro nance will gain in importance in the future if micro nance institutions continue to get better access to capital markets and if competition further rises. JEL classi cation: F37, G21, G34, L13, O16 Keywords: micro nance, group lending, individual lending University of Munich, Akademiestr. 1/III, 80799 Munich, Germany. Tel: +49 89 218
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