Group versus Individual Lending in Microfinance

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

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

Classification and Topics

• 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

Contributors, Places and Time

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

Further information

• DOI: doi:10.5282/ubm/epub.7486
• Handle: http://hdl.handle.net/10419/104267
• URN: urn:nbn:de:bvb:19-epub-7486-4
• Last update: 10.03.2025, 11:42 AM CET