IS THE CREDIT WORTH IT? FOR-PROFIT LENDERS IN MICROFINANCE WITH RATIONAL AND BEHAVIORAL BORROWERS

Jonathan de Quidt and Maitreesh Ghatak

Annals of Public and Cooperative Economics, 2018, vol. 89, issue 1, 175-199

Abstract: The bulk of the literature on microcredit has focused on either not-for-profit lenders or assumes a perfectly competitive, zero-profit market equilibrium. Yet the market has experienced a significant shift toward for-profit lending and the assumptions of perfect competition are likely to be too strong in many locations. We review the state of the literature on for-profit lending in microcredit, consider its implications for both conventionally ‘rational’ borrowers and for borrowers with behavioral biases, and point out directions for future research.

Date: 2018
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Working Paper: Is the credit worth it? For-profit lenders in microfinance with rational and behavioral borrowers (2018)
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