Agent Intermediated Lending: A New Approach to Microfinance

Pushkar Maitra, Sandip Mitra, Dilip Mookherjee, Alberto Motta and Sujata Visaria
Authors registered in the RePEc Author Service: Sujata Visaria and Sujata Visaria

No 16-13, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: We study trader agent intermediated lending (TRAIL), a new version of microfinance where local intermediaries (lenders) are appointed as agents to recommend borrowers for individual liability loans designed to allow the financing of agricultural operations. The scheme involves no peer monitoring, group meetings or savings requirements. In a randomized evaluation conducted in West Bengal, India, TRAIL loans have higher take-up rates and higher repayment rates than traditional group-based joint liability loans. This can be explained by a model of segmented informal credit markets with adverse selection, in which repayment-based commissions deter collusion and motivate agents to recommend low-risk borrowers.

Keywords: Microfinance; Agent Based Lending; Group Lending; Selection; Takeup; Repayment (search for similar items in EconPapers)
JEL-codes: D82 O16 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2013-05
New Economics Papers: this item is included in nep-ban, nep-iue and nep-mfd
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Citations: View citations in EconPapers (4)

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