Group credit: A means to improve information transfer and loan repayment performance

Wenner, Mark D.

doi:10.1080/00220389508422414

Cited by 128 publications

(100 citation statements)

References 16 publications

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“…In particular, group-based lending and other social mechanisms help resolve the problems of imperfect information and imperfect enforcement of lending. By relying on peer pressure to monitor and enforce contracts, group-based lending provides an incentive for borrowers to repay and helps avoid adverse selection of borrowers, thereby improving loan recovery rates (Rashid andTownsend 1994 andWenner 1995). While groupbased lending does not always improve loan recovery (Besley and Coate 1995), it constitutes a powerful incentive for repayment when it helps create social collateral' that works against loan default.4 Conning considers the implication of group lending as one of several optimal borrowing strategies and examines whether joint liability contracts can be designed to create the social capital required to replace physical collateral.…”

Section: Why Micro-credit Matters For Poor Householdsmentioning

confidence: 99%

Micro-Credit Programme Evaluation: A Critical Review

Khandker¹

1998

IDS Bulletin

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summary Micro‐credit programmes have emerged as an antipoverty instrument in many low‐income countries. They target the poor, especially women, with financial services to help them become self‐employed in rural non‐farm activities of their choice. In contrast, micro‐credit programmes of the village banks supported by Accion International or Women's World Banking provide financial services in response to market failures in which formal financial institutions failed to cater financial services to small‐ and medium‐scale enterprises. No matter whether they are instruments for poverty reduction or market failure, micro‐credit programmes practice financial intermediation for their targeted clienteles. The article reviews the methodologies practiced to evaluate micro‐credit programmes, provides a unified framework for anlaysis, and discusses future research directions.

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Section: Why Micro-credit Matters For Poor Householdsmentioning

confidence: 99%

Micro-Credit Programme Evaluation: A Critical Review

Khandker¹

1998

IDS Bulletin

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“…A contrario, sur la base d'un échantillon de 146 groupes de crédit à Madagascar, Zeller (1998) montre que l'existence des liens sociaux étroits entre les cosignataires permet de garantir des taux de remboursement élevés. En ce qui concerne les travaux portant sur le problème de risque moral, Wenner (1995) et Zeller (1998) …”

Section: 2designdescontratsdecréditetperformancedesimfunclassified

“…L'inefficacité des contrats de crédit de groupe peut s'expliquer par les comportements déviants des membres du groupe du pool d'emprunteurs. L'effet positif de l'existence des mécanismes de régula-tion à l'intérieur d'un pool d'emprunteurs sur la qualité du portefeuille de cré-dit trouvé par Wenner (1995) et Zeller (1998) peut être fragilisé par les comportements de transgression des règles de fonctionnement et de gouvernance à l'intérieur du groupe. L'apparition de ces comportements peut se solder par un défaut de remboursement avec des conséquences financières néfastes pour l'IMF.…”

Section: 2résultatsdel'analysemultivariéeunclassified

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Gestion des risques et performance des institutions de microfinance

Tchuigoua¹,

Nekhili²

2012

rei

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L’objectif de cet article est d’analyser la relation entre la gestion des risques et la performance financière des institutions de microfinance. Les dispositifs analysés relèvent des choix des contrats de crédit et de la régulation prudentielle. La performance est appréhendée sous trois dimensions. Elle renvoie à la rentabilité économique, à la performance opérationnelle et à la qualité du portefeuille. Sur la base d’un échantillon de 148 institutions de microfinance durant la période 2001-2006, notre étude montre que la spécialisation sur un type de contrat améliore la qualité du portefeuille. Plus précisément, les contrats de crédit de groupe améliorent la qualité du portefeuille et influencent négativement la rentabilité économique et la performance opérationnelle, indiquant que le choix des contrats de crédit de groupe conduit les institutions de microfinance à arbitrer entre la rentabilité et la qualité du portefeuille. Enfin, la régulation n’influence en aucune mesure les trois dimensions de la performance susmentionnées.

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“…One important feature ensuring the success of micro…nance, and especially of group-lending, is peer screening at the stage of group formation (Ghatak, 1999 and 2000; Wydick, 1999;Wenner, 1995). However, this ex-ante mechanism may be insu¢ cient to avoid ex-post opportunism (Stiglitz, 1990), as for instance diversion of borrowed funds towards current consumption which impairs longer term productive projects (Menon 2004 Other mechanisms, based on social pressure, have been proposed as a way to overcome ex-post moral hazard.…”

Section: Introductionmentioning

confidence: 99%

Solidarity and Microfinance

Cerasi

Dallapellegrina

2012

SSRN Journal

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In this paper we analyze the role of peer solidarity in fostering productive investments in the context of micro…nance. When there is asymmetric information between lenders and borrowers and loans are not collateralized, borrowers may divert loans towards current consumption rather than investing in production. We assume that solidarity is accorded by a network of individuals close enough to the borrower (peers) so as to share private information about hidden e¤ort in the productive project. The model shows that peer solidarity might have contrasting e¤ects on the e¤ort in the productive investment. On the one hand, since solidarity transfers are contingent on the e¤ort, they increase borrower's incentive to invest. On the other hand, solidarity tranfers decrease the marginal utility of future consumption at the expense of productive investment. The predictions of the model are tested on households enrolled in micro-lending programs who were surveyed in Bangladesh by the World Bank during the period 1991-1992. Empirical …ndings suggest a positive relationship between the …nancial capability of borrowers'solidarity network and the share of loans invested in productive activities.

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Group credit: A means to improve information transfer and loan repayment performance

Cited by 128 publications

References 16 publications

Micro-Credit Programme Evaluation: A Critical Review

Micro-Credit Programme Evaluation: A Critical Review

Gestion des risques et performance des institutions de microfinance

Solidarity and Microfinance

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