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Market Structure and Borrower Welfare in Microfinance

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

No 9165, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Motivated by recent controversies surrounding the role of commercial lenders in microfinance, we analyze 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 analyzed, 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 information frictions competition typically delivers similar borrower welfare to non-profit lending. In addition, for-profit lenders are less likely to use joint liability than non-profits.

Keywords: for-profit; market power; microfinance; social capital (search for similar items in EconPapers)
JEL-codes: D4 D82 G21 L4 O12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-mfd
Date: 2012-10
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Related works:
Journal Article: Market Structure and Borrower Welfare in Microfinance (2018) Downloads
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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