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Microfinance games [electronic resource]

By: Gine, Xavier.
Contributor(s): Jakiela, Pamela | Karlan, Dean.
Material type: materialTypeLabelBookSeries: Policy Research Working Paper, no. 3959. Publisher: Washington, D.C. World Bank 2006Description: 46 p.Subject(s): Microfinance | Game theoryDDC classification: 332.1 Summary: """Microfinance has been heralded as an effective way to address imperfections in credit markets. But from a theoretical perspective, the success of microfinance contracts has puzzling elements. In particular, the group-based mechanisms often employed are vulnerable to free-riding and collusion, although they can also reduce moral hazard and improve selection. The authors created an experimental economics laboratory in a large urban market in Lima, Peru and over seven months conducted 11 different games that allow them to unpack microfinance mechanisms in a systematic way. They find that risk-taking broadly conforms to predicted patterns, but that behavior is safer than optimal. The results help to explain why pioneering microfinance institutions have been moving away from group-based contracts. ""--World Bank web site."
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332.1 G4M4 (Browse shelf) Available 162547

Includes bibliographical references.

"""Microfinance has been heralded as an effective way to address imperfections in credit markets. But from a theoretical perspective, the success of microfinance contracts has puzzling elements. In particular, the group-based mechanisms often employed are vulnerable to free-riding and collusion, although they can also reduce moral hazard and improve selection. The authors created an experimental economics laboratory in a large urban market in Lima, Peru and over seven months conducted 11 different games that allow them to unpack microfinance mechanisms in a systematic way. They find that risk-taking broadly conforms to predicted patterns, but that behavior is safer than optimal. The results help to explain why pioneering microfinance institutions have been moving away from group-based contracts. ""--World Bank web site."

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