Repayment performance in group lending: Evidence from Jordan

Moh'd Al-Azzam, R. Carter Hill and Sudipta Sarangi

Journal of Development Economics, 2012, vol. 97, issue 2, 404-414

Abstract: Using data from a survey of 160 urban borrowing groups of the Microfund for Women in Jordan, we investigate the effect of screening, peer monitoring, group pressure, and social ties on borrowing groups' repayment behavior as an indirect test of different theoretical models. The dependent variable used captures the intensity of default measured by the total number of days of late repayment after each due date, allowing us to use count data models with cluster standard errors. As theory predicts, our empirical analysis suggests that peer monitoring, group pressure, and social ties reduce delinquency. The paper uncovers interesting evidence about the role of social ties and religion. Most notably, in an area where religion contributes to attitudes and beliefs of individuals, we find that religiosity improves repayment performance.

Keywords: Group lending; Repayment performance; Count data (search for similar items in EconPapers)
JEL-codes: D82 G29 O12 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (32)

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Working Paper: Repayment Performance in Group Lending: Evidence from Jordan (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:97:y:2012:i:2:p:404-414

DOI: 10.1016/j.jdeveco.2011.06.006

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