Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/74887 
Authors: 
Year of Publication: 
2010
Series/Report no.: 
LICOS Discussion Paper No. 266
Publisher: 
Katholieke Universiteit Leuven, LICOS Centre for Institutions and Economic Performance, Leuven
Abstract: 
We analyze an oligopolistic microcredit market characterized by asymmetric infirmation and institutions that can offer only one type of contract. We study the effects of competition on contract choice when small entrepreneurs can borrow from more than one institution due to the absence of credit bureaus. We show that appropriate contract design can eliminate the ex-ante incentives for multiple borrowing. Moreover, when the market is still largely unserved and particularly risky, a screening strategy leading to contract differentiation and credit rationing is unambiguously the most effective to avoid multiple borrowing.
Subjects: 
Microfinance
Competition
Credit Bureaus
Multiple Borrowing
Credit Rationing
JEL: 
G21
L13
L31
O16
Document Type: 
Working Paper

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