Market Structure and Borrower Welfare in Microfinance

Maitreesh Ghatak, Thiemo Fetzer and Jonathan de Quidt

No 9165, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Motivated by recent controversies surrounding the role of commercial lenders in microfinance, we analyze borrower welfare under different market structures, considering a benevolent non-profit lender, a for-profit monopolist, and a competitive credit market. To understand the magnitude of the effects analyzed, we simulate the model with parameters estimated from the MIX Market database. Our results suggest that market power can have severe implications for borrower welfare, while despite possible information frictions competition typically delivers similar borrower welfare to non-profit lending. In addition, for-profit lenders are less likely to use joint liability than non-profits.

Keywords: For-profit; market power; Microfinance; Social capital (search for similar items in EconPapers)
JEL-codes: D4 D82 G21 L4 O12 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-ban and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

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Related works:
Journal Article: Market Structure and Borrower Welfare in Microfinance (2018)
Working Paper: Market Structure and Borrower Welfare in Micro Finance (2013)
Working Paper: Market Structure and Borrower Welfare in Microfinance (2012)
Working Paper: Market structure and borrower welfare in microfinance (2012)
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