SEQUENTIAL GROUP LENDING WITH AND WITHOUT GROUP LIABILITY; GRAMEEN I VERSUS GRAMEEN II

Saswatee Mukherjee ()
Additional contact information
Saswatee Mukherjee: Department of Economics, Presidency University, 86/1, College Street, Kolkata 700073, India

Journal of Developmental Entrepreneurship (JDE), 2020, vol. 25, issue 03, 1-16

Abstract: The paper shows that in absence of any physical collateral, sequential group lending with joint-liability fails to guarantee loan repayment by borrowers because of the coordination problem among the borrowers. The model finds that under certain conditions, profits can be higher under joint-liability group lending if one can ensure peer pressure is adequate to guarantee there is no strategic default, i.e., repayment when the borrower has earned enough to be able to repay. From the lender’s point of view, the individual lending contract may turn out to be a better option than joint-liability group lending under certain circumstances.

Keywords: MFIs; competition; group lending (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.worldscientific.com/doi/abs/10.1142/S108494672050017X
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wsi:jdexxx:v:25:y:2020:i:03:n:s108494672050017x

Ordering information: This journal article can be ordered from

DOI: 10.1142/S108494672050017X

Access Statistics for this article

Journal of Developmental Entrepreneurship (JDE) is currently edited by Peter Koveos

More articles in Journal of Developmental Entrepreneurship (JDE) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().