Asymmetric group loans, non-assortative matching and adverse selection

This paper shows that an asymmetric group debt contract, where one borrower co-signs for another, but not vice versa, leads to heterogeneous matching. The analysis suggests that micro finance organizations can achieve the first best by offering asymmetric group contracts.

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Year of publication:	2014
Authors:	Gangopadhyay, Shubhashis ; Lensink, Robert
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 124.2014, 2, p. 185-187
Publisher:	Elsevier
Subject:	Cosigning \| Group lending \| Joint liability \| Asymmetry of information \| Credit rationing \| Micro finance

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Type of publication:	Article
Classification:	D8 - Information and Uncertainty ; G2 - Financial Institutions and Services ; O1 - Economic Development
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010933296