This paper analyzes the possibility of investment coordination leading to outcomes which dominate non-investment equilibria in the presence of monopolistic competition. We establish when complementarity leads to investment coordination failures and explore the welfare implications of coordinated...

In recent years, microfinance institutions have expanded into group lending with individual liability, leaving out the joint liability clause which was an important feature in earlier lending contracts. Recent experimental evidence indicates that group lending may yield benefits, specifically...

Informal groups cannot rely on external enforcement to insure that members abide by their obligations. It is generally assumed that these problems are solved by social sanctions and reputational effects. The present paper focuses on roscas, one of the most commonly found informal financial...