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Abstract

This paper shows that, in a group-lending environment characterized by positive assortative matching, a microfinance institution can achieve a Pareto improvement by promoting negative matching among borrowers. Some new implications are: i borrowers may be better off under mixedgroups; ii a heterogeneous group lending equilibrium is possible even when individual or homogeneous group equilibria do not exist.



Item Type: MPRA Paper -

Original Title: Is it better to be mixed in group lending?-

Language: English-

Keywords: joint liability lending; assortative matching; screening-

Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D81 - Criteria for Decision-Making under Risk and UncertaintyG - Financial Economics > G2 - Financial Institutions and Services > G20 - GeneralO - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development-





Author: Reito, Francesco

Source: https://mpra.ub.uni-muenchen.de/76129/



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