Enforcement with Costly Group Formation
Economics Bulletin, Vol. 15, No. 9, pp. 1−8
Posted: 11 May 2005
Abstract
The joint liability literature claims that positive assortative matching, or risk homogeneity, is always the first best solution. We examine this claim in presence of group formation costs and find that the assertion is not always true.
Keywords: Group Lending, Risk Heterogeneity, Formation Costs
JEL Classification: D81, G20, O12
Suggested Citation: Suggested Citation
Chatterjee, Prabirendra and Sarangi, Sudipta, Enforcement with Costly Group Formation. Economics Bulletin, Vol. 15, No. 9, pp. 1−8, Available at SSRN: https://ssrn.com/abstract=716524
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