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Commercialization and the Decline of Joint Liability Microcredit

Jonathan de Quidt (), Thiemo Fetzer and Maitreesh Ghatak ()

CAGE Online Working Paper Series from Competitive Advantage in the Global Economy (CAGE)

Abstract: Numerous authors point to a decline in joint liability microcredit, rise in individual liability lending. But empirical evidence is lacking, and there have been no rigorous analyses of possible causes. We first show using the well-known MIX Market dataset that there is evidence for a decline. Second, we show theoretically that commercialization-an increase in competition and a shift from non-profit to for-profit lending (both of which are present in the data)–drives lenders to reduce their use of joint liability loan contracts. Third, we test the model’s key predictions, and find support for them in the data.

Keywords: microfinance; joint liability; commercialization; market structure JEL Classification: G21, O12, O16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mfd
Date: 2016
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http://www2.warwick.ac.uk/fac/soc/economics/resear ... /272-2016_fetzer.pdf

Related works:
Journal Article: Commercialization and the decline of joint liability microcredit (2018) Downloads
Working Paper: Commercialization and the Decline of Joint Liability Microcredit (2016) Downloads
Working Paper: Commercialization and the Decline of Joint Liability Microcredit (2016) Downloads
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