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Is The Credit Worth It? For-Profit Lenders In Microfinance With Rational And Behavioral Borrowers

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  • Jonathan DE QUIDT
  • Maitreesh GHATAK

Abstract

The bulk of the literature on microcredit has focused on either not-for-profit lenders or assumes a perfectly competitive, zero-profit market equilibrium. Yet the market has experienced a significant shift toward for-profit lending and the assumptions of perfect competition are likely to be too strong in many locations. We review the state of the literature on for-profit lending in microcredit, consider its implications for both conventionally ‘rational’ borrowers and for borrowers with behavioral biases, and point out directions for future research.

Suggested Citation

  • Jonathan DE QUIDT & Maitreesh GHATAK, 2018. "Is The Credit Worth It? For-Profit Lenders In Microfinance With Rational And Behavioral Borrowers," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 89(1), pages 175-199, March.
    • Handle: RePEc:bla:annpce:v:88:y:2017:i:3:p:175-199
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    Cited by:

    1. Anirban Pal & Piyush Kumar Singh, 2021. "Do socially motivated self‐help groups perform better? Exploring determinants of micro‐credit groups’ performance in Eastern India," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 92(1), pages 119-146, March.

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    • F3 - International Economics - - International Finance
    • G3 - Financial Economics - - Corporate Finance and Governance

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