Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94035
Authors: 
Lehner, Maria
Year of Publication: 
2009
Series/Report no.: 
SFB/TR 15 Discussion Paper 299
Abstract: 
Microfinance is typically associated with joint liability of group members. However, a large part of microfinance institutions rather offers individual instead of group loans. We analyze the incentive mechanisms in both individual and group contracts. Moreover, we show that microfinance institutions offer group loans when the loan size is rather large, refinancing costs are high, and competition between microfinance institutions is low. Otherwise, individual loans are offered. Interestingly, our analysis predicts that individual lending in microfinance will gain in importance in the future if microfinance institutions continue to get better access to capital markets and if competition further rises.
Subjects: 
microfinance
group loans
individual loans
JEL: 
G21
L13
O16
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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