Group lending with peer selection and moral hazard
The theory on group lending suggests that joint liability induces borrowers to form homogeneous groups based on their risk types, which alleviates adverse selection and contributes to the success of microcredit schemes. We extend this theory by allowing individuals to differ both in their exogenous...
| Autores principales: | , , |
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| Formato: | Journal Article |
| Lenguaje: | Inglés |
| Publicado: |
Scientific Research Publishing, Inc.
2022
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| Materias: | |
| Acceso en línea: | https://hdl.handle.net/10568/141287 |
| _version_ | 1855524868076863488 |
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| author | Hernandez, Manuel A. Liu, Yanyan Gan, Li |
| author_browse | Gan, Li Hernandez, Manuel A. Liu, Yanyan |
| author_facet | Hernandez, Manuel A. Liu, Yanyan Gan, Li |
| author_sort | Hernandez, Manuel A. |
| collection | Repository of Agricultural Research Outputs (CGSpace) |
| description | The theory on group lending suggests that joint liability induces borrowers to form homogeneous groups based on their risk types, which alleviates adverse selection and contributes to the success of microcredit schemes. We extend this theory by allowing individuals to differ both in their exogenous risk type and in their endogenous effort level. We find that joint liability leads to positive assortative matching in both a non-cooperative and cooperative game setting. Groups of safe borrowers additionally exhibit higher effort levels, which reinforces their likelihood of repayment as opposed to risky groups. |
| format | Journal Article |
| id | CGSpace141287 |
| institution | CGIAR Consortium |
| language | Inglés |
| publishDate | 2022 |
| publishDateRange | 2022 |
| publishDateSort | 2022 |
| publisher | Scientific Research Publishing, Inc. |
| publisherStr | Scientific Research Publishing, Inc. |
| record_format | dspace |
| spelling | CGSpace1412872025-12-08T10:11:39Z Group lending with peer selection and moral hazard Hernandez, Manuel A. Liu, Yanyan Gan, Li lending joint liability liability microcredit group approaches moral hazard risk remuneration credit The theory on group lending suggests that joint liability induces borrowers to form homogeneous groups based on their risk types, which alleviates adverse selection and contributes to the success of microcredit schemes. We extend this theory by allowing individuals to differ both in their exogenous risk type and in their endogenous effort level. We find that joint liability leads to positive assortative matching in both a non-cooperative and cooperative game setting. Groups of safe borrowers additionally exhibit higher effort levels, which reinforces their likelihood of repayment as opposed to risky groups. 2022 2024-04-12T13:37:37Z 2024-04-12T13:37:37Z Journal Article https://hdl.handle.net/10568/141287 en Open Access Scientific Research Publishing, Inc. Hernandez, Manuel A.; Liu, Yanyan; and Gan, Li. 2022. Group lending with peer selection and moral hazard. Theoretical Economics Letters 12(5). https://doi.org/10.4236/tel.2022.125074 |
| spellingShingle | lending joint liability liability microcredit group approaches moral hazard risk remuneration credit Hernandez, Manuel A. Liu, Yanyan Gan, Li Group lending with peer selection and moral hazard |
| title | Group lending with peer selection and moral hazard |
| title_full | Group lending with peer selection and moral hazard |
| title_fullStr | Group lending with peer selection and moral hazard |
| title_full_unstemmed | Group lending with peer selection and moral hazard |
| title_short | Group lending with peer selection and moral hazard |
| title_sort | group lending with peer selection and moral hazard |
| topic | lending joint liability liability microcredit group approaches moral hazard risk remuneration credit |
| url | https://hdl.handle.net/10568/141287 |
| work_keys_str_mv | AT hernandezmanuela grouplendingwithpeerselectionandmoralhazard AT liuyanyan grouplendingwithpeerselectionandmoralhazard AT ganli grouplendingwithpeerselectionandmoralhazard |