Group insurance and lending with endogenous social collateral

Paal, Beatrix; Wiseman, Thomas

doi:10.1016/j.jdeveco.2009.11.009

Cited by 28 publications

(16 citation statements)

References 31 publications

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“…The underlying logic of group lending is that the joint liability may leads to mitigate the moral hazard and adverse selection through peer monitoring and screening functions. Paal and Wiseman (2011) demonstrate that offering joint liability loan can bring a high profit to lender compared with the individual liability contracts. The joint liability is also a helpful tool to improve the performance of the group members.…”

Section: Social Intermediation Servicesmentioning

confidence: 92%

Conceptual Framework: The Role of Microfinance on the Wellbeing of Poor People Cases Studies from Malaysia and Yemen

Al-Shami¹,

Majid²,

Rashid³

et al. 2013

ASS

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The role of microfinance institutions in poverty reduction and wellbeing improvement has attracted the policymakers' attention in the developing countries across the globe as well as Malaysia and Yemen. The underlying logic is that by providing microfinance services, poor will be able to participate in the economic market through forming their small businesses. Consequently, they will be able to generate income and improve their households, self esteem and efficacy. Despite the popularity and apparent success of microfinance, there is no clear evidence that asserts the positive impact of microfinance scheme. Therefore, the aim of this research is to propose a conceptual framework in the role of Malaysian and Yemeni microfinance on the poor' wellbeing. Microfinance servers refer to financial, nonfinancial and social services while the clients' wellbeing refers to the clients' household, micro and small enterprises performance and empowerment. The mixed method is employed to carry out the objective of this research. The cross-sectional survey with the randomized control trait is used for collecting the quantitative data while the regression logistic with chi-squire are used to analysis. In contrast, the semi interview is conducted to collect and analysis qualitative data. The three microfinance institutions of Amanah Ikhtir Malaysia, Yayasan Usaha Maju and Economic Fund for National Entrepreneurs represented Malaysian microfinance while the Al-Amel Bank represented Yemeni microfinance.

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Section: Social Intermediation Servicesmentioning

confidence: 92%

Conceptual Framework: The Role of Microfinance on the Wellbeing of Poor People Cases Studies from Malaysia and Yemen

Al-Shami¹,

Majid²,

Rashid³

et al. 2013

ASS

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“…Fafchamps and Minten (2002) find that traders with a stronger social network earn higher profits by reducing transaction costs. Higher social capital also helps solve the enforcement problem in risksharing arrangements, because it makes individuals creditworthy (Karlan, 2007;Paal & Wiseman, 2011) and helps recover from negative calamities quickly (Carter & Castillo, 2005).…”

Section: Introductionmentioning

confidence: 99%

Social Capital Formation and Credit Access: Evidence from Sri Lanka

Shoji

Aoyagi

Kasahara³

et al. 2012

World Development

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“…We add to this literature by analyzing how social capital interacts with sequential lending, in particular how the nature of collusion affects repayment performance. In so doing this paper, along with Paal and Wiseman (2011), takes a step in reconciling the mixed results found in the empirical literature.…”

Section: Social Capitalmentioning

confidence: 87%

“…Also, in contrast to Laffont and Rey (2003), Bhole and Ogden (2010), Paal andWiseman (2011), andde Quidt et al (2012) we analyze sequential, rather than simultaneous lending schemes. Further, unlike Bhole and Ogden (2010) and Paal and Wiseman (2011), (i) we do not allow for repeated interactions but instead analyze a dynamic one-off interaction, and (ii) the magnitude of social sanctions is norm driven in our framework. We add to this literature by analyzing how social capital interacts with sequential lending, in particular how the nature of collusion affects repayment performance.…”

Section: Social Capitalmentioning

confidence: 99%

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Sequential lending with dynamic joint liability in micro-finance

Chowdhury

Sengupta

2014

Journal of Development Economics

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This paper develops a theory of sequential lending in groups in micro-finance that centers on the notion of dynamic incentives, in particular the simple idea that default incentives should be relatively uniformly distributed across time. In a framework that allows project returns to accrue over time, as well as strategic default, we show that sequential lending can help resolve problems arising out of coordinated default, thus improving project efficiency vis-a-vis individual lending. Inter alia, we also provide a justification for the use of frequent repayment schemes, as well as demonstrate that, depending on how it is manifested, social capital has implications for project efficiency and borrower default. We next examine the optimal choices for the MFI and derive conditions for the optimality of the group lending arrangement. Our framework also provides for some plausible hypotheses as to why there has been a recent transition from group to individual lending.

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Group insurance and lending with endogenous social collateral

Cited by 28 publications

References 31 publications

Conceptual Framework: The Role of Microfinance on the Wellbeing of Poor People Cases Studies from Malaysia and Yemen

Conceptual Framework: The Role of Microfinance on the Wellbeing of Poor People Cases Studies from Malaysia and Yemen

Social Capital Formation and Credit Access: Evidence from Sri Lanka

Sequential lending with dynamic joint liability in micro-finance

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