Commercialization and the Decline of Joint Liability Microcredit

Thiemo Fetzer

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: Numerous authors point to a decline in joint liability microcredit, and 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 (search for similar items in EconPapers)
JEL-codes: G21 O12 O16 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-ban
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Commercialization and the decline of joint liability microcredit (2018)
Working Paper: Commercialization and the Decline of Joint Liability Microcredit (2016)
Working Paper: Commercialization and the Decline of Joint Liability Microcredit (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1119

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