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Market Structure and Borrower Welfare in Microfinance

Jonathan de Quidt, Thiemo Fetzer and Maitreesh Ghatak ()

Economic Journal, 2018, vol. 128, issue 610, 1019-1046

Abstract: Motivated by recent controversies surrounding the role of commercial lenders in microfinance, and calls for regulation of the sector, we analyse 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 analysed, 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 enforcement externalities competition typically delivers similar borrower welfare to non†profit lending.

Date: 2018
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https://doi.org/10.1111/ecoj.12591

Related works:
Working Paper: Market Structure and Borrower Welfare in Micro Finance (2013) Downloads
Working Paper: Market Structure and Borrower Welfare in Microfinance (2012) Downloads
Working Paper: Market Structure and Borrower Welfare in Microfinance (2012) Downloads
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Economic Journal is currently edited by Estelle Cantillon, Martin Cripps, Andrea Galeotti, Morten Ravn, Kjell G. Salvanes, Frederic Vermeulen, Hans-Joachim Voth and Rachel Kranton

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