In this paper we present a model of competition between informal lending and group lending. The paper is organized as follows. The second paragraph reviews the economic literature that analyzes separately group contracts and informal lending markets. The third paragraph tries to answer the...

In recent years, an important number of impact studies have attempted to examine the effect of credit on income poverty; however, many of these studies have not paid sufficient attention to the problems of endogeneity and selection bias. The few exceptional cases have employed econometric...

Empirical evidence suggests that widespread financial distress, by disrupting enforcement of credit contracts, can be self-propagatory and adversely affect the supply of credit. We propose a unifying theory that models the interplay between enforcement, borrower default decisions, and the...

This paper analyzes the relationship between the terms on bank loans and local crime rates, employing a sample of over 300,000 bank-firm relationships. Controlling for firm, market and bank characteristics the results show that where the crime rate is higher borrowers pay higher interest rates,...

China has maintained a financial system with favorable treatments toward state-owned enterprises. Albeit having been denied access to formal financing such as bank loans, China's non-state firms have grown rather fast. China's experience has often been interpreted as indicating that alternative...

Using data from a new survey of small and medium-sized enterprises in Myanmar, we analyse enterprise demand for formal credit and the extent to which they are constrained in the formal credit market. We account for firms self-selecting out of the credit market in Myanmar. Our data contain...

Delegating the allocation of public resources to community members is an increasingly popular form of delivering development programs and are associated with a tradeoff between improved information about potential beneficiaries and favoritism towards local elites. Unlike targeting cash transfers...

In this paper, we explore the relationship between firm growth, access to finance, and the efficiency of capital allocation in Viet Nam over the period 2005-2015. Using data from the UNU-WIDER Viet Nam SME survey, we test whether firms with higher marginal returns to capital are more or less...

Limited borrower information may create targeting distortions in credit markets. Community-based lending programs may reduce these distortions by exploiting information transmitted in local networks, but connections may create asymmetries in power. This paper analyzes how local leaders balance...

If the demand for credit by the poor changes little when interest rates increase, lenders can raise fees to cost-covering levels without losing customers. This claim is at the core of sustainable microfinance strategies that aim to provide banking services to the poor while eschewing long-term...