Is it better to be mixed in group lending?

descriptionPublicationkeyboard_double_arrow_right Article 26 Sep 2018 Italy English Publisher:WileyJournal:Review of Development Economics, volume 23, pages 54-71 (issn: 1363-6669, eissn: 1467-9361,

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Authors: Francesco Reito;

doi: 10.1111/rode.12549

handle: 20.500.11769/362497

Is it better to be mixed in group lending?

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Abstract

AbstractThis paper shows that, in a group‐lending scheme with joint liability, a microfinance institution can achieve a Pareto improvement by promoting negative assortative matching among borrowers. The main results are: (i) borrowers may be better off in heterogeneous groups; and (ii) a heterogeneous group equilibrium is possible when individual or homogeneous group equilibria do not exist.

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Italy

Related Organizations

University of Catania
Italy

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