Public-private Partnerships in Micro-finance: Should NGO Involvement be Restricted?

Roy Chowdhury, Prabal and Roy, Jaideep (2007): Public-private Partnerships in Micro-finance: Should NGO Involvement be Restricted?

Abstract

This paper examines public-private partnerships in micro-finance, whereby NGOs can help in channelizing credit to the poor, both in borrower selection, as well as in project implementation. We argue that a distortion may arise out of the fact that the private partner, i.e. the NGO, is a motivated agent. We find that whenever the project is neither too productive, nor too unproductive, reducing such distortion requires unbundling borrower selection and project implementation, with the NGO being involved in borrower selection only.

• Item Type: MPRA Paper
• Institution: Indian Statistical Institute, Delhi Center and Lancaster University.
• Language: English
• Keywords: Public-private partnerships; micro-finance; motivated agent; NGO
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; H - Public Economics > H5 - National Government Expenditures and Related Policies; G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy

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