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The Invisible Collateral

Author

Listed:
  • Muduli, Silu
  • Dash, Shridhar Kumar

Abstract

A borrower may hesitate to borrow from her close relatives and family members as it costs them in terms of reduction in social insurance in the case of default. This invisible cost reduces credit risk. India’s household indebtedness survey shows some evidence on these borrowing preferences. This perspective on borrowing decisions derived from the community can be used as one of the dimensions in credit risk evaluation and in policy formulation.

Suggested Citation

  • Muduli, Silu & Dash, Shridhar Kumar, 2019. "The Invisible Collateral," MPRA Paper 103687, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:103687
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    File URL: https://mpra.ub.uni-muenchen.de/103687/1/MPRA_paper_103687.pdf
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    Citations

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    Cited by:

    1. Silu Muduli & Manu Sharma, 2022. "Loan Repayment Dynamics of Self-help Groups in India," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 16(2), pages 183-202, May.
    2. Muduli, Silu & Sharma, Manu, 2022. "Loan Repayment Dynamics of Self-Help Groups in India," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 16(2), pages 183-202.

    More about this item

    Keywords

    Network; Trust; Credit Risk;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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