Microfinance Games

Microfinance banks use group-based lending contracts to strengthen borrowers' incentives for diligence, but the contracts are vulnerable to free-riding and collusion. We systematically unpack microfinance mechanisms through ten experimental games played in an experimental economics laboratory i...

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Bibliographic Details
Main Authors:	Gine, Xavier, Jakiela, Pamela, Karlan, Dean, Morduch, Jonathan
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Asymmetric and Private Information D820 Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Capital Budgeting Fixed Investment and Inventory Studies G310 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160
Online Access:	http://hdl.handle.net/10986/5778

id	okr-10986-5778
recordtype	oai_dc
spelling	okr-10986-57782021-04-23T14:02:23Z Microfinance Games Gine, Xavier Jakiela, Pamela Karlan, Dean Morduch, Jonathan Asymmetric and Private Information D820 Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Capital Budgeting Fixed Investment and Inventory Studies G310 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Microfinance banks use group-based lending contracts to strengthen borrowers' incentives for diligence, but the contracts are vulnerable to free-riding and collusion. We systematically unpack microfinance mechanisms through ten experimental games played in an experimental economics laboratory in urban Peru. Risk-taking broadly conforms to theoretical predictions, with dynamic incentives strongly reducing risk-taking even without group-based mechanisms. Group lending increases risk-taking, especially for risk-averse borrowers, but this is moderated when borrowers form their own groups. Group contracts benefit borrowers by creating implicit insurance against investment losses, but the costs are borne by other borrowers, especially the most risk averse. 2012-03-30T07:34:30Z 2012-03-30T07:34:30Z 2010 Journal Article American Economic Journal: Applied Economics 19457782 http://hdl.handle.net/10986/5778 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article Peru
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Asymmetric and Private Information D820 Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Capital Budgeting Fixed Investment and Inventory Studies G310 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160
spellingShingle	Asymmetric and Private Information D820 Banks Other Depository Institutions Micro Finance Institutions Mortgages G210 Capital Budgeting Fixed Investment and Inventory Studies G310 Economic Development: Financial Markets Saving and Capital Investment Corporate Finance and Governance O160 Gine, Xavier Jakiela, Pamela Karlan, Dean Morduch, Jonathan Microfinance Games
geographic_facet	Peru
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	Microfinance banks use group-based lending contracts to strengthen borrowers' incentives for diligence, but the contracts are vulnerable to free-riding and collusion. We systematically unpack microfinance mechanisms through ten experimental games played in an experimental economics laboratory in urban Peru. Risk-taking broadly conforms to theoretical predictions, with dynamic incentives strongly reducing risk-taking even without group-based mechanisms. Group lending increases risk-taking, especially for risk-averse borrowers, but this is moderated when borrowers form their own groups. Group contracts benefit borrowers by creating implicit insurance against investment losses, but the costs are borne by other borrowers, especially the most risk averse.
format	Journal Article
author	Gine, Xavier Jakiela, Pamela Karlan, Dean Morduch, Jonathan
author_facet	Gine, Xavier Jakiela, Pamela Karlan, Dean Morduch, Jonathan
author_sort	Gine, Xavier
title	Microfinance Games
title_short	Microfinance Games
title_full	Microfinance Games
title_fullStr	Microfinance Games
title_full_unstemmed	Microfinance Games
title_sort	microfinance games
publishDate	2012
url	http://hdl.handle.net/10986/5778
_version_	1764396263450607616

Microfinance Games

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