Arbeitspapier

Group versus Individual Lending in Microfinance

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.

Language
Englisch

Bibliographic citation
Series: Munich Discussion Paper ; No. 2008-24

Classification
Wirtschaft
International Finance Forecasting and Simulation: Models and Applications
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance
Oligopoly and Other Imperfect Markets
Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
Subject
Mikrofinanzierung
Kreditgeschäft
Genossenschaftsbank
Theorie

Event
Geistige Schöpfung
(who)
Lehner, Maria
Event
Veröffentlichung
(who)
Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
(where)
München
(when)
2008

DOI
doi:10.5282/ubm/epub.7486
Handle
URN
urn:nbn:de:bvb:19-epub-7486-4
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Lehner, Maria
  • Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät

Time of origin

  • 2008

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