Compulsory versus Voluntary Savings as Incentive Mechanism in Microlending Contracts

Olivier Bruno and Knar Khachatryan ()
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Knar Khachatryan: GREDEG - Groupe de Recherche en Droit, Economie et Gestion - UNS - Université Nice Sophia Antipolis (1965 - 2019) - CNRS - Centre National de la Recherche Scientifique - UniCA - Université Côte d'Azur

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Abstract: This paper investigates the incentive mechanism of individual microlending contracts focusing particularly on microsavings. We built a model to show the role of compulsory and voluntary microsavings in addressing problems of information asymmetries. We show that voluntary savings can serve as a complementary tool in repayment enforcement at the same time inducing borrowers to reveal abilities of their projects.

Keywords: Screening; Microfinance; Compulsory microsavings; Voluntary microsavings; Incentive mechanism; Repayment enforcement (search for similar items in EconPapers)
Date: 2011-06-23
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Published in 28e Journées Internationales d'Economie Monétaire, Jun 2011, Reading, United Kingdom

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00723880

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