Microfinance Horizon

Author: Helke Wälde, Johannes Gutenberg University Mainz

Abstract:

Group lending programs are said to be the key factor of success of microfinance. They are said to reduce information asymmetries in credit contracts and to increase repayment rates. Despite that, in recent years more and more individual credits without collateral are given, even if there is no mutual monitoring of the borrowers. We use basic descriptive statistics on individual and group panel data, which we construct out of a World Bank data set. We provide first evidence that individuals that are not participating in group credits accumulate wealth more quickly than participants of group credit programs.

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