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http://ssrn.com/abstract=1634949
 
 

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Micro-Finance Decision Making: A Field Study of Prosocial Lending


Jeff Galak


Carnegie Mellon University

Deborah A. Small


University of Pennsylvania - Marketing Department; Carnegie Mellon University

Andrew T. Stephen


University of Pittsburgh

December 9, 2010


Abstract:     
Prosocial lending in the form of micro-financing, small uncollateralized loans to entrepreneurs in the developing world, has recently emerged as a leading contender as a cure for world poverty. Our research investigates, in a field setting with real world and consequential data, the characteristics of borrowers that engender lending. We observe that lenders favor individual borrowers over groups or consortia of borrowers, a pattern consistent with the identifiable victim effect. They also favor borrowers that are socially proximate to themselves. Across three dimensions of social distance (gender, occupation, and first name initial) lenders prefer to give to those who are more like themselves. Finally, we discuss policy implications of these findings.

Number of Pages in PDF File: 55

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Date posted: July 6, 2010 ; Last revised: April 11, 2012

Suggested Citation

Galak, Jeff and Small, Deborah A. and Stephen, Andrew T., Micro-Finance Decision Making: A Field Study of Prosocial Lending (December 9, 2010). Available at SSRN: http://ssrn.com/abstract=1634949 or http://dx.doi.org/10.2139/ssrn.1634949

Contact Information

Jeff Galak (Contact Author)
Carnegie Mellon University ( email )
Pittsburgh, PA 15213-3890
United States
412-268-5810 (Phone)
HOME PAGE: http://www.jeffgalak.com
Deborah A. Small
University of Pennsylvania - Marketing Department ( email )
700 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104-6340
United States

Carnegie Mellon University ( email )
Pittsburgh, PA 15213-3890
United States
Andrew T. Stephen
University of Pittsburgh ( email )
United States
HOME PAGE: http://www.andrewstephen.net
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