We use a principal–agent framework and data from the Ethiopian Rural Household Survey between 1994 and 2004 to understand biases in the distribution of food aid in Ethiopia. We show that even when aid is systematically misallocated, aid recipients may match official classifications of needy...

Group loans with joint liability are a distinguishing feature of many microfinance programs. While such lending benefits millions of borrowers, major lending institutions acknowledge its limited impact among the very poor and have shifted towards individual loans. This paper attempts to explain...