Kundu, AMIT (2011): Savings, lending rate and skill improvement in micro-finance operating through public-private cooperation. Published in: IUP Journal of Managerial Economics , Vol. 4, No. Nov, 2011 (15. November 2011): pp. 1-19.
Download (686kB) | Preview
In this paper, micro-finance programme through joint liability credit contract is explained with the help of two-stage game when the programme is operated by a non-motivated NGO with the help of commercial bank and government. We find that even in the presence of public-private cooperation and back ended subsidy provided by the government, both individual sanction as well as social sanction plays an important role of security against credit for proper functioning of the programme. Non-homogeneity among the group members may allow the socially powerful member to force her less powerful co-member to repay her debt with interest and enjoy free ride after taking the advantage of joint liability. We have also proved that the non-motivated NGO who itself plays the function of the self-help group can offer credit to the group members at lowest possible rate of interest and can arrange sufficient training for the group members for skill improvement after group formation if and only if it gets sufficient financial support from the government in the initial period and if the linked commercial bank choose low lending rate to the group in credit-linkage programme. This will also encourage each group member to enhance compulsory savings at maximum amount in each installment in her respective group in both the periods, which ultimately will help her to get higher amount of credit in each period to improve consumption of the member household progressively.
|Item Type:||MPRA Paper|
|Original Title:||Savings, lending rate and skill improvement in micro-finance operating through public-private cooperation|
|Keywords:||Micro Savings, Micro Credit, Self-Help Group, SGSY Scheme, Public-Private Cooperation, Non Motivated NGO, Simultaneous Financing, Lending Rate, Social Sanction, Individual Sanction|
|Subjects:||G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity
I - Health, Education, and Welfare > I3 - Welfare, Well-Being, and Poverty > I38 - Government Policy ; Provision and Effects of Welfare Programs
E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E21 - Consumption ; Saving ; Wealth
G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages
|Depositing User:||AMIT KUNDU|
|Date Deposited:||05. Jun 2012 16:15|
|Last Modified:||15. Feb 2013 12:55|
Armendariz. B. and Morduch Jonathan (2005): ‘The Economics of Micro-Finance’, MIT Press, Cambridge, Londan, England.
Besley.T., Coate.S. (1995): ‘Group Lending, Repayment Schemes and Social Collateral’; Journal of Development Economics, 46, 1-18.
Besley.T. and Ghatak.M. (1999): ‘Public Private Partnership for the Provision of Public Goods, Theory and Application to NGO’ DEDPS 1999, 17 London School of Economics
Bond.P. and Rai. S. Ashok (2008): ‘Cosigned vs. Group Loan’; Journal of Development Economics, 85, 58-80.
Cernea.M. (1988): ‘Non Governmental Organizing Sector and Local Government’ World Bank Discussion Paper, The World Bank
Ghatak .M. (1999): ’Group Lending, Local Information and Peer Selection’; Journal of Development Economics, 60, 27-50.
Ghatak.M. (2000): ‘Screening by the Company You Keep: Joint Liability Lending and Peer Selection Effect”; Economic Journal 110, 601-631.
Ghatak. M. and Guinnane T.W.(1999): ‘The Economics of Lending with Joint Liability: Theory and Practice’; Journal of Development Economics 60, 195-228.
Hossein.M. (1998): ‘Credit for the Alleviation of Rural Poverty: The Grameen Bank in Bangladesh’; Research Report 65, IFPRI February.
Kundu Amit (2008): ‘Impact of SGSY on Self-Help Group Members in West Bengal’ Mimeo, Department of Economics, Jadavpur University, Kolkata, India.
Morduch.J.(1997); ‘The Micro Finance Revolution’, Mimeo, Department of Economics, Harvard University.
Morduch .J. (1999); ‘The Micro-Finance Promise’; Journal of Economic Literature, 37, 1564-1614.
Rai.A. and Sjostram.T. (2004); ‘If Grameen Lending Efficient? Repayment Incentive and Insurance in Village Economies’; Review of Economic Studies, 71, 217-234.
Roy Jaideep and Prabal Roy Chowdhury (2007): ‘Public-Private Partnership in Micro-Finance: Should NGO Involvement be Restricted?’ Mimeo
Roy Chowdhury Prabal (2005): ‘Group Lending: Sequential Financing, Lender Monitoring and Joint Liability’; Journal of Development Economics, 71 (2005), 415-439.
Roy Chowdhury Prabal (2007); ‘Group Lending with Sequential Financing, Contingent Renewal and Social Capital’ Journal of Development Economics, 84, 487-506.
Srinivasan, G. (2002): ‘Linking Self-Help Group with Banks in India”, SEDME-Small Enterprises Development, Management and Extension Journal, December.
Stiglitz .J. (1990): ‘Peer Monitoring and Credit Markets’ World Bank Economic Review 4, 351-366.
Tassel. E.V. (1999): ‘ Group Lending under Asymmetric Information’; Journal of Development Economics, 60, 3-25.
United Nations Inter Agency Committee on Integrated Rural Development of Asia and the Pacific Partners in Rural Poverty Alleviation; NGO Cooperation (1992) United Nations, New York
Varian . H. (1990): ‘ Monitoring Agents With Other Agents’, Journal of Institutional and Theoretical Economics, 146, 153-174.