Screening by The Company You Keep : Joint Liability Lending and The Peer Selection Effect  

Oleh:

Ghatak, Maitreesh

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: The Economic Journal (EBSCO) vol. 110 no. 465 (2000), page 601-631.
Topik: liability; screening; liability lending; peer selection
Fulltext: 601.pdf (427.42KB)

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: EE28.2 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

We look at an economic environment where borrowers have some information about the nature of each other's projects that lenders do not. We show that joint-liability lending contracts, similar to those used by credit cooperatives and group-lending schemes, will induce endogenous peer selection in the formation of groups in a way that the instrument of joint liability can be used as a screening device to exploit this local information. This can improve welfare and repayment rates if standard screening instruments such as collateral are unavailable.

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