Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/22105 
Year of Publication: 
2005
Series/Report no.: 
Working Paper Series No. 2005,10
Publisher: 
European University Viadrina, The Postgraduate Research Programme: Capital Markets and Finance in the Enlarged Europe, Frankfurt (Oder)
Abstract: 
We analyze the incentive mechanism of individual micro-lending contracts and we compare its key factors with those of joint-liability loan contracts. Using our data set, we firstly show that in the individual contract there are three elements, the demand for non-conventional collateral, a screening procedure which combines new with traditional elements, and dynamic incentives in combination with the termination threat in case of default, which ensure high repayment rates of up to 100%. We further show that the joint-liability approach may lead to similar repayment rates, however based on a different incentive system. We reveal that the target group which can be efficiently served by either one of the two mechanisms is different.
Document Type: 
Working Paper

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