Liability Structure in Small-scale Finance : Evidence from a Natural Experiment
Microfinance, the provision of small individual and business loans, has witnessed dramatic growth, reaching over 150 million borrowers worldwide. Much of its success has been attributed to overcoming the challenges of information asymmetries in unc...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100920115522 http://hdl.handle.net/10986/3910 |
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okr-10986-3910 |
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oai_dc |
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Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCESS TO FINANCIAL SERVICES ACCOUNTING ASSETS BAD CLIENTS BANK ACCESS BANKING MARKET BANKING SECTOR BANKING SERVICES BIASES BORROWER BORROWER PERFORMANCE BORROWER WELFARE BORROWING BRANCH BRANCHES BUSINESS LOANS CAPITAL ACCUMULATION CLAIM COLLATERAL COMMERCIAL BANKS COMPANY COMPULSORY DEPOSIT COMPULSORY DEPOSITS COOPERATIVE SOCIETIES CREDIT AGREEMENT CREDIT COOPERATIVE CREDIT COOPERATIVES CREDIT MARKET CREDIT MARKETS CREDIT PROGRAM CREDIT PROGRAMS DEBT DEBT REPAYMENTS DEBTS DEFAULT RATE DEFAULT RATES DEFAULTER DEFAULTERS DEFAULTS DELINQUENCY RATE DEPENDENT DEPOSIT DISBURSEMENT DUMMY VARIABLE EMERGING MARKETS ENTREPRENEURS ENTREPRENEURSHIP EVENT OF DEFAULT EXPENDITURE FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL SUPPORT FIRM SIZE FIRST LOAN FIRST-TIME BORROWERS GROUP BORROWER GROUP BORROWERS GROUP CREDIT GROUP LENDING GROUP LOAN GROUP REPAYMENT GUARANTOR GUARANTORS HOUSEHOLDS INCOME INEQUALITY INDIVIDUAL LIABILITY INDIVIDUAL LOAN INDIVIDUAL LOANS INFORMATION ASYMMETRIES INFORMATION ASYMMETRY INITIAL PUBLIC OFFERINGS INSTALLMENT INSTALLMENTS INSURANCE INSURANCE MECHANISMS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVESTMENT CHOICE INVESTMENT PROJECTS JOINT LIABILITY JOINT LIABILITY CLAUSE LACK OF ACCESS LEGAL CONSTRAINTS LENDER LENDERS LENDING POLICIES LENDING PORTFOLIO LIABILITY LIABILITY STRUCTURE LIABILITY STRUCTURES LIQUIDATION LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN APPLICANT LOAN CLIENT LOAN CLIENTS LOAN CONTRACT LOAN CONTRACTS LOAN DATA LOAN DISBURSEMENT LOAN OFFICERS LOAN PERFORMANCE LOAN PORTFOLIO LOAN PRODUCT LOAN PRODUCTS LOAN REPAYMENT LOAN REPAYMENTS LOAN TERM LOAN TERMS MARKET FAILURES MARKET STRUCTURE MATURITY MATURITY DATES MEDIUM ENTERPRISE MFI MFIS MICROCREDIT MICROFINANCE MICROFINANCE CLIENTS MICROFINANCE INSTITUTION MICROFINANCE ORGANIZATIONS MICROFINANCE PRACTITIONERS MICROFINANCE PROGRAM MICROFINANCE PROGRAMS MINIMUM BALANCE MORAL HAZARD OPTIMAL CONTRACT OUTSTANDING LOANS PENALTIES PHYSICAL CAPITAL POLITICAL ECONOMY PREPAYMENTS PROVISION OF CREDIT REPAYMENT REPAYMENT BEHAVIOR REPAYMENT DISCIPLINE REPAYMENT INCENTIVES REPAYMENT PERFORMANCE REPAYMENT RATES REPAYMENT SCHEDULES RESERVES RISK SHARING RISK TAKING RISKY BORROWERS SALARIES SAVINGS SAVINGS ACCOUNT SAVINGS ACCOUNTS SAVINGS DEPOSIT SAVINGS DEPOSITS SAVINGS GROUPS SAVINGS PORTFOLIO SAVINGS PRODUCTS SAVINGS SERVICES SECOND LOAN SMALL FIRMS SOCIAL CAPITAL SOCIAL COLLATERAL SUBSIDIZATION TRANSACTION TRANSACTION COSTS URBAN AREAS VILLAGE WAGES WITHDRAWAL WORKING CAPITAL |
| spellingShingle |
ACCESS TO FINANCIAL SERVICES ACCOUNTING ASSETS BAD CLIENTS BANK ACCESS BANKING MARKET BANKING SECTOR BANKING SERVICES BIASES BORROWER BORROWER PERFORMANCE BORROWER WELFARE BORROWING BRANCH BRANCHES BUSINESS LOANS CAPITAL ACCUMULATION CLAIM COLLATERAL COMMERCIAL BANKS COMPANY COMPULSORY DEPOSIT COMPULSORY DEPOSITS COOPERATIVE SOCIETIES CREDIT AGREEMENT CREDIT COOPERATIVE CREDIT COOPERATIVES CREDIT MARKET CREDIT MARKETS CREDIT PROGRAM CREDIT PROGRAMS DEBT DEBT REPAYMENTS DEBTS DEFAULT RATE DEFAULT RATES DEFAULTER DEFAULTERS DEFAULTS DELINQUENCY RATE DEPENDENT DEPOSIT DISBURSEMENT DUMMY VARIABLE EMERGING MARKETS ENTREPRENEURS ENTREPRENEURSHIP EVENT OF DEFAULT EXPENDITURE FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL SUPPORT FIRM SIZE FIRST LOAN FIRST-TIME BORROWERS GROUP BORROWER GROUP BORROWERS GROUP CREDIT GROUP LENDING GROUP LOAN GROUP REPAYMENT GUARANTOR GUARANTORS HOUSEHOLDS INCOME INEQUALITY INDIVIDUAL LIABILITY INDIVIDUAL LOAN INDIVIDUAL LOANS INFORMATION ASYMMETRIES INFORMATION ASYMMETRY INITIAL PUBLIC OFFERINGS INSTALLMENT INSTALLMENTS INSURANCE INSURANCE MECHANISMS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVESTMENT CHOICE INVESTMENT PROJECTS JOINT LIABILITY JOINT LIABILITY CLAUSE LACK OF ACCESS LEGAL CONSTRAINTS LENDER LENDERS LENDING POLICIES LENDING PORTFOLIO LIABILITY LIABILITY STRUCTURE LIABILITY STRUCTURES LIQUIDATION LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN APPLICANT LOAN CLIENT LOAN CLIENTS LOAN CONTRACT LOAN CONTRACTS LOAN DATA LOAN DISBURSEMENT LOAN OFFICERS LOAN PERFORMANCE LOAN PORTFOLIO LOAN PRODUCT LOAN PRODUCTS LOAN REPAYMENT LOAN REPAYMENTS LOAN TERM LOAN TERMS MARKET FAILURES MARKET STRUCTURE MATURITY MATURITY DATES MEDIUM ENTERPRISE MFI MFIS MICROCREDIT MICROFINANCE MICROFINANCE CLIENTS MICROFINANCE INSTITUTION MICROFINANCE ORGANIZATIONS MICROFINANCE PRACTITIONERS MICROFINANCE PROGRAM MICROFINANCE PROGRAMS MINIMUM BALANCE MORAL HAZARD OPTIMAL CONTRACT OUTSTANDING LOANS PENALTIES PHYSICAL CAPITAL POLITICAL ECONOMY PREPAYMENTS PROVISION OF CREDIT REPAYMENT REPAYMENT BEHAVIOR REPAYMENT DISCIPLINE REPAYMENT INCENTIVES REPAYMENT PERFORMANCE REPAYMENT RATES REPAYMENT SCHEDULES RESERVES RISK SHARING RISK TAKING RISKY BORROWERS SALARIES SAVINGS SAVINGS ACCOUNT SAVINGS ACCOUNTS SAVINGS DEPOSIT SAVINGS DEPOSITS SAVINGS GROUPS SAVINGS PORTFOLIO SAVINGS PRODUCTS SAVINGS SERVICES SECOND LOAN SMALL FIRMS SOCIAL CAPITAL SOCIAL COLLATERAL SUBSIDIZATION TRANSACTION TRANSACTION COSTS URBAN AREAS VILLAGE WAGES WITHDRAWAL WORKING CAPITAL Carpena, Fenella Cole, Shawn Shapiro, Jeremy Zia, Bilal Liability Structure in Small-scale Finance : Evidence from a Natural Experiment |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 5427 |
| description |
Microfinance, the provision of small
individual and business loans, has witnessed dramatic
growth, reaching over 150 million borrowers worldwide. Much
of its success has been attributed to overcoming the
challenges of information asymmetries in uncollateralized
lending. Yet, very little is known about the optimal
contract structure of such loans -- there is substantial
variation across lenders, even within a particular setting.
This paper exploits a plausibly exogenous change in the
liability structure offered by a microfinance program in
India, which shifted from individual to group liability
lending. The analysis finds compelling evidence that
contract structure matters: for the same borrower, required
monthly loan installments are 6 percent less likely to be
missed under the group liability setting, relative to
individual liability. In addition, compulsory savings
deposits are 19 percent less likely to be missed under group
liability contracts. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Carpena, Fenella Cole, Shawn Shapiro, Jeremy Zia, Bilal |
| author_facet |
Carpena, Fenella Cole, Shawn Shapiro, Jeremy Zia, Bilal |
| author_sort |
Carpena, Fenella |
| title |
Liability Structure in Small-scale Finance : Evidence from a Natural
Experiment |
| title_short |
Liability Structure in Small-scale Finance : Evidence from a Natural
Experiment |
| title_full |
Liability Structure in Small-scale Finance : Evidence from a Natural
Experiment |
| title_fullStr |
Liability Structure in Small-scale Finance : Evidence from a Natural
Experiment |
| title_full_unstemmed |
Liability Structure in Small-scale Finance : Evidence from a Natural
Experiment |
| title_sort |
liability structure in small-scale finance : evidence from a natural
experiment |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100920115522 http://hdl.handle.net/10986/3910 |
| _version_ |
1764388972741525504 |
| spelling |
okr-10986-39102021-04-23T14:02:13Z Liability Structure in Small-scale Finance : Evidence from a Natural Experiment Carpena, Fenella Cole, Shawn Shapiro, Jeremy Zia, Bilal ACCESS TO FINANCIAL SERVICES ACCOUNTING ASSETS BAD CLIENTS BANK ACCESS BANKING MARKET BANKING SECTOR BANKING SERVICES BIASES BORROWER BORROWER PERFORMANCE BORROWER WELFARE BORROWING BRANCH BRANCHES BUSINESS LOANS CAPITAL ACCUMULATION CLAIM COLLATERAL COMMERCIAL BANKS COMPANY COMPULSORY DEPOSIT COMPULSORY DEPOSITS COOPERATIVE SOCIETIES CREDIT AGREEMENT CREDIT COOPERATIVE CREDIT COOPERATIVES CREDIT MARKET CREDIT MARKETS CREDIT PROGRAM CREDIT PROGRAMS DEBT DEBT REPAYMENTS DEBTS DEFAULT RATE DEFAULT RATES DEFAULTER DEFAULTERS DEFAULTS DELINQUENCY RATE DEPENDENT DEPOSIT DISBURSEMENT DUMMY VARIABLE EMERGING MARKETS ENTREPRENEURS ENTREPRENEURSHIP EVENT OF DEFAULT EXPENDITURE FINANCIAL MARKET FINANCIAL MARKETS FINANCIAL SERVICES FINANCIAL SUPPORT FIRM SIZE FIRST LOAN FIRST-TIME BORROWERS GROUP BORROWER GROUP BORROWERS GROUP CREDIT GROUP LENDING GROUP LOAN GROUP REPAYMENT GUARANTOR GUARANTORS HOUSEHOLDS INCOME INEQUALITY INDIVIDUAL LIABILITY INDIVIDUAL LOAN INDIVIDUAL LOANS INFORMATION ASYMMETRIES INFORMATION ASYMMETRY INITIAL PUBLIC OFFERINGS INSTALLMENT INSTALLMENTS INSURANCE INSURANCE MECHANISMS INTEREST PAYMENTS INTEREST RATE INTEREST RATES INTERNATIONAL BANK INVESTMENT CHOICE INVESTMENT PROJECTS JOINT LIABILITY JOINT LIABILITY CLAUSE LACK OF ACCESS LEGAL CONSTRAINTS LENDER LENDERS LENDING POLICIES LENDING PORTFOLIO LIABILITY LIABILITY STRUCTURE LIABILITY STRUCTURES LIQUIDATION LIQUIDITY LOAN LOAN AMOUNT LOAN AMOUNTS LOAN APPLICANT LOAN CLIENT LOAN CLIENTS LOAN CONTRACT LOAN CONTRACTS LOAN DATA LOAN DISBURSEMENT LOAN OFFICERS LOAN PERFORMANCE LOAN PORTFOLIO LOAN PRODUCT LOAN PRODUCTS LOAN REPAYMENT LOAN REPAYMENTS LOAN TERM LOAN TERMS MARKET FAILURES MARKET STRUCTURE MATURITY MATURITY DATES MEDIUM ENTERPRISE MFI MFIS MICROCREDIT MICROFINANCE MICROFINANCE CLIENTS MICROFINANCE INSTITUTION MICROFINANCE ORGANIZATIONS MICROFINANCE PRACTITIONERS MICROFINANCE PROGRAM MICROFINANCE PROGRAMS MINIMUM BALANCE MORAL HAZARD OPTIMAL CONTRACT OUTSTANDING LOANS PENALTIES PHYSICAL CAPITAL POLITICAL ECONOMY PREPAYMENTS PROVISION OF CREDIT REPAYMENT REPAYMENT BEHAVIOR REPAYMENT DISCIPLINE REPAYMENT INCENTIVES REPAYMENT PERFORMANCE REPAYMENT RATES REPAYMENT SCHEDULES RESERVES RISK SHARING RISK TAKING RISKY BORROWERS SALARIES SAVINGS SAVINGS ACCOUNT SAVINGS ACCOUNTS SAVINGS DEPOSIT SAVINGS DEPOSITS SAVINGS GROUPS SAVINGS PORTFOLIO SAVINGS PRODUCTS SAVINGS SERVICES SECOND LOAN SMALL FIRMS SOCIAL CAPITAL SOCIAL COLLATERAL SUBSIDIZATION TRANSACTION TRANSACTION COSTS URBAN AREAS VILLAGE WAGES WITHDRAWAL WORKING CAPITAL Microfinance, the provision of small individual and business loans, has witnessed dramatic growth, reaching over 150 million borrowers worldwide. Much of its success has been attributed to overcoming the challenges of information asymmetries in uncollateralized lending. Yet, very little is known about the optimal contract structure of such loans -- there is substantial variation across lenders, even within a particular setting. This paper exploits a plausibly exogenous change in the liability structure offered by a microfinance program in India, which shifted from individual to group liability lending. The analysis finds compelling evidence that contract structure matters: for the same borrower, required monthly loan installments are 6 percent less likely to be missed under the group liability setting, relative to individual liability. In addition, compulsory savings deposits are 19 percent less likely to be missed under group liability contracts. 2012-03-19T18:42:00Z 2012-03-19T18:42:00Z 2010-09-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20100920115522 http://hdl.handle.net/10986/3910 English Policy Research working paper ; no. WPS 5427 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |