Commercialization and the Decline of Joint Liability Microcredit

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.


Issue Date:
Mar 03 2016
Publication Type:
Working or Discussion Paper
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/269575
Language:
English
Total Pages:
55
JEL Codes:
G21; O12; O16
Series Statement:
WERP 1119




 Record created 2018-03-19, last modified 2020-10-28

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