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Group versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending Groups

Xavier Gine () and Dean Karlan ()

No 229136, Center Discussion Papers from Yale University, Economic Growth Center

Abstract: Group liability in microcredit purports to improve repayment rates through peer screening, monitoring, and enforcement. However, it may create excessive pressure, and discourage reliable clients from borrowing. Two randomized trials tested the overall effect, as well as specific mechanisms. The first removed group liability from pre-existing groups and the second randomly assigned villages to either group or individual liability loans. In both, groups still held weekly meetings. We find no increase in default and larger groups after three years in pre-existing areas, and no change in default but fewer groups created after two years in the expansion areas.

Keywords: Consumer/Household Economics; Financial Economics; Institutional and Behavioral Economics; International Development (search for similar items in EconPapers)
Pages: 36
Date: 2009-05
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https://ageconsearch.umn.edu/record/229136/files/cdp970.pdf (application/pdf)

Related works:
Working Paper: Group versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending Groups (2009) Downloads
Working Paper: Group versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending Groups (2009) Downloads
Working Paper: Group versus Individual Liability: Long Term Evidence from Philippine Microcredit Lending Groups (2009) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:yaleeg:229136

DOI: 10.22004/ag.econ.229136

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