Interdependencies in micro-credit group: evidence from repayment data

Nidhiya MenonAuthor-Email: Nmenon@brandeis.edu
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Nidhiya MenonAuthor-Email: Nmenon@brandeis.edu: Brandeis University, USA

Journal of Developing Areas, 2007, vol. 40, issue 2, 111-132

Abstract: We use repayment data from Grameen Bank groups to study mutual dependence in behavior among participants. Such dependence is a measure of group cohesion, and is interpreted as evidence for the existence of inter-connectedness among members at the group level. Results from a dynamic fixed-effects probit model demonstrate that individual repayment outcomes are significantly influenced by own lagged repayment behavior, and by averages of lagged repayment behaviors for the remaining members of a group. Simulations of own and cross effects between participants provide further support for strong inter-dependencies at the group level in repayment outcomes. By strengthening mutual support networks, such inter-dependencies may be crucial for poverty alleviation in developing countries such as Bangladesh.

Keywords: Inter-dependences; Repayment; Grameen Bank (search for similar items in EconPapers)
JEL-codes: D70 O12 O16 (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:jda:journl:vol.40:year:2007:issue2:pp:111-132

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