Repayment incentives and the distribution of gains from group lending

• 成果类型: Article
• 署名作者: Baland, Jean-Marie; Somanathan, Rohini; Wahhaj, Zaki
• 署名单位: University of Namur; Delhi School of Economics; University of Delhi; University of Oxford
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2013.07.008
• 发表日期: 2013
• 页码: 131-139
• 关键词: Microcredit; Joint-liability; group lending; Repayment incentives; Social sanctions

摘要

Group loans with joint liability are a distinguishing feature of many microfinance programs. While such lending benefits millions of borrowers, major lending institutions acknowledge its limited impact among the very poor and have shifted towards individual loans. This paper attempts to explain this trend by exploring the relationship between borrower wealth and the benefits from group lending when access to credit is limited by strategic default. In our model, individuals of heterogeneous wealth face a given investment opportunity so poor investors demand larger loans. We show that the largest loan offered as an individual contract cannot be supported as a group loan. Joint liability cannot therefore extend credit outreach in the absence of additional social sanctions within groups. We also find that the benefits from group loans are increasing in borrower wealth and that optimal group size depends on project characteristics. By allowing for multi-person groups and wealth heterogeneity in the population, the paper extends the standard framework to analyze joint liability and contributes to an understanding of the conditions under which microcredit can reduce poverty. (C) 2013 Elsevier B.V. All rights reserved.