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Ethnicity and Reciprocity: A model of Credit Transactions in Ghana

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  • Eliana La Ferrara

Abstract

This paper studies kinship band networks as capital market institutions. It explores two of the channels through which membership in a community where individuals are genealogically linked, such as a kinship group, can affect their access to informal credit. The first is that incentives to default are lower for community members who can expect retaliation to fall on their offspring as well as on themselves (social enforcement). The second is that lenders prefer to lend to those members from whom they can expect reciprocation in the form of future loans for themselves or for their children (reciprocity). These two effects are incorporated in a theoretical framework with overlapping generations and tested using household-level data from Ghana.

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  • Eliana La Ferrara, "undated". "Ethnicity and Reciprocity: A model of Credit Transactions in Ghana," Working Papers 193, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
    • Handle: RePEc:igi:igierp:193
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    Cited by:

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    2. Christian Stoff, 2004. "Establishing Cooperation between Groups: Ingroup versus Outgroup Punishment," SOI - Working Papers 0416, Socioeconomic Institute - University of Zurich, revised Feb 2006.
    3. Vincenzo Scoppa, 2003. "Contratti incompleti ed enforcement endogeno. Una rassegna della letteratura," Economia politica, Società editrice il Mulino, issue 3, pages 391-440.
    4. Rahman, Muhammad Habibur & Lee, Grace H.Y. & Shabnam, Nourin & Jayasinghe, Susantha, 2020. "Weathering trust," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 449-473.
    5. Alesina, Alberto & La Ferrara, Eliana, 2002. "Who trusts others?," Journal of Public Economics, Elsevier, vol. 85(2), pages 207-234, August.
    6. Morduch, Jonathan, 1999. "Between the State and the Market: Can Informal Insurance Patch the Safety Net?," The World Bank Research Observer, World Bank, vol. 14(2), pages 187-207, August.
    7. De Paola, Maria & Scoppa, Vincenzo, 2003. "Family ties and training provision in an insider-outsider framework," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(2), pages 197-217, May.
    8. De Paola, Maria & Scoppa, Vincenzo, 2005. "The Role of Family Ties in the Labour Market. An Interpretation Based on Efficiency Wage Theory," MPRA Paper 8956, University Library of Munich, Germany.

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