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Public-private partnerships in micro-finance: Should NGO involvement be restricted?

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  • Roy, Jaideep
  • Chowdhury, Prabal Roy

Abstract

This paper examines public-private partnerships in micro-finance, whereby NGOs can help in channelizing credit to the poor, both in borrower selection, as well as in project implementation. We argue that a distortion may arise out of the fact that the private partner, i.e. the NGO, is a motivated agent. We find that whenever the project is neither too productive, nor too unproductive, reducing such distortion requires unbundling borrower selection and project implementation, with the NGO being involved in borrower selection only. Further, we compare and contrast two alternative credit delivery mechanisms, the linkage mechanism (which is the focus of this paper), with the 'Grameen' one.

Suggested Citation

  • Roy, Jaideep & Chowdhury, Prabal Roy, 2009. "Public-private partnerships in micro-finance: Should NGO involvement be restricted?," Journal of Development Economics, Elsevier, vol. 90(2), pages 200-208, November.
    • Handle: RePEc:eee:deveco:v:90:y:2009:i:2:p:200-208
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    Cited by:

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    2. Sagamba, MoÏse & Shchetinin, Oleg & Yusupov, Nurmukhammad, 2013. "Do Microloan Officers Want to Lend to the Less Advantaged? Evidence from a Choice Experiment," World Development, Elsevier, vol. 42(C), pages 182-198.
    3. Schmitz, Patrick W., 2021. "Optimal ownership of public goods under asymmetric information," Journal of Public Economics, Elsevier, vol. 198(C).
    4. Rodrigo de Oliveira Leite & Layla dos Santos Mendes & Roberto Tommasetti & Vinicius Mothe Maia & Rodrigo Soto Larrain, 2022. "The Role of Motivated Financial Institutions on Community Currencies Loans," IJFS, MDPI, vol. 10(4), pages 1-10, October.
    5. Emilios Galariotis & Christophe Villa & Nurmukhammad Yusupov, 2011. "Recent Advances in Lending to the Poor with Asymmetric Information," Journal of Development Studies, Taylor & Francis Journals, vol. 47(9), pages 1371-1390, July.
    6. Shin, Wonkyu & Kim, Youngwan & Sohn, Hyuk-Sang, 2017. "Do Different Implementing Partnerships Lead to Different Project Outcomes? Evidence from the World Bank Project-Level Evaluation Data," World Development, Elsevier, vol. 95(C), pages 268-284.
    7. Sedai, Ashish Kumar & Vasudevan, Ramaa & Alves Pena, Anita, 2021. "Friends and benefits? Endogenous rotating savings and credit associations as alternative for women’s empowerment in India," World Development, Elsevier, vol. 145(C).
    8. Brishti Guha & Prabal Roy Chowdhury, 2012. "Micro-finance competition: Motivated micro-lenders, double-dipping and default," Discussion Papers 12-01, Indian Statistical Institute, Delhi.
    9. Maurício José Serpa Barros de Moura & Rodrigo de Losso da Silveira Bueno & Helena Wagner P. Rocha & Patricia Morilha Muritiba & Sérgio Nunes Muritiba, 2011. "An analysis of factors affecting the ethical conduct of microcredit officers," Brazilian Business Review, Fucape Business School, vol. 8(1), pages 1-26, January.
    10. Miller, Paige & Brux, Jacqueline Murray & Neema, Clementia Murembe, 2016. "Microcredit in Uganda: Fundamental Reform or Just another Neoliberal Policy?," African Journal of Economic Review, African Journal of Economic Review, vol. 4(2), July.

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    More about this item

    Keywords

    Public-private partnerships Micro-finance Motivated agent NGO Ownership;

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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