Jon De Quidt

development and international economics seminar

Jon De Quidt

IIES Stockholm
Commercialization and the decline of joint liability microcredit
Joint with
Thiemo Fetzer, Maitreesh Ghatak
Venue

Château Lafarge

Château Lafarge - Salle de séminaires
Château Lafarge
Route des Milles
13290 Les Milles
Date(s)
Friday, June 17 2016| 12:00pm to 1:30pm
Contact(s)

Alice Fabre: alice.fabre[at]univ-amu.fr

Abstract

Numerous authors point to a decline in joint liability microcredit, and rise in individual liability lending. But empirical evidence is lacking, and there have been no rigorous analyses of possible causes. We first show using the well-known MIX Market dataset that there is evidence for a decline. Second, we show theoretically that commercialization - an increase in competition and a shift from non-profit to for-profit lending (both of which are present in the data) - drives lenders to reduce their use of joint liability loan contracts. Third, we test the model's key predictions, and find support for them in the data.