Credit Constraints, Collateral and Lending to the Poor

Marcel Fafchamps

Revue d’économie du développement, 2014, vol. 22, issue HS01, 71-89

Abstract: In the development economics literature it is common to read that the poor cannot invest to escape their poverty because they are credit constrained, and that they are credit constrained because they lack collateral. In this paper the author deconstructs these often heard arguments and finds them fundamentally flawed. He argues that lack of collateral is not the reason why the poor often are credit constrained?lack of regular income is.

Keywords: poverty; debt; savings (search for similar items in EconPapers)
Date: 2014
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