Microfinance Beyond Group Lending

Posted: 4 May 2001

See all articles by Beatriz Armendariz

Beatriz Armendariz

University College London - Department of Economics; Harvard University; Harvard University - Department of Economics

Jonathan Morduch

New York University (NYU) - Robert F. Wagner Graduate School of Public Service; New York University (NYU) - Department of Economics

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Abstract

Microlending is growing in Eastern Europe, Russia and China as a flexible means of widening access to financial services, both to help alleviate poverty and to encourage private-sector activity. We describe mechanisms that allow these programmes to successfully penetrate new segments of credit markets. These features include direct monitoring, regular repayment schedules, and the use of non-refinancing threats. These mechanisms allow the programmes to generate high repayment rates from low-income borrowers without requiring collateral and without using group lending contracts that feature joint liability.

Keywords: Microfinance, transition, poverty relief, joint liability, repayment incentives

JEL Classification: D82, L14, O12, O17

Suggested Citation

Armendariz, Beatriz and Morduch, Jonathan, Microfinance Beyond Group Lending. Economics of Transition, Vol. 8, No. 2, July 2000. Available at SSRN: https://ssrn.com/abstract=264809

Beatriz Armendariz

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Harvard University - Department of Economics

Littauer Center
Cambridge, MA 02138
United States

Jonathan Morduch (Contact Author)

New York University (NYU) - Robert F. Wagner Graduate School of Public Service ( email )

The Puck Building
295 Lafayette Street, Second Floor
New York, NY 10012
United States
(212) 998-7515 (Phone)

New York University (NYU) - Department of Economics ( email )

269 Mercer Street, 7th Floor
New York, NY 10011
United States

HOME PAGE: http://www.nyu.edu/projects/morduch

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