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El crédito solidario, el colateral social, y la colusión. Algunos apuntes
[Group Lending, Social Collateral and Collusion. Some Notes]

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  • Galarza, Francisco

Abstract

In recent years, the literature on group lending has increased considerably, inspired by the successful microfinance experiences in Bangladesh, Bolivia, and other developing countries. A great deal of this literature has emphasized the ability of group lending mechanisms to reduce borrower selection costs, and to increase peer monitoring and enforcement. In terms of enforcement, it is commonly assumed that peers will keep a vigilant eye on the other group members' economic activities. The existence of social ties is also expected to impose additional constraints (and penalties) to opportunistic behavior, thus reducing default rates. This review article takes a critical perspective on the group lending methodology and examines both sides of the story: its beneficial features and its potential limitations.

Suggested Citation

  • Galarza, Francisco, 2003. "El crédito solidario, el colateral social, y la colusión. Algunos apuntes [Group Lending, Social Collateral and Collusion. Some Notes]," MPRA Paper 30442, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:30442
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    References listed on IDEAS

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    More about this item

    Keywords

    group lending; social collateral; microfinance;
    All these keywords.

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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