Recent Advances in Lending to the Poor with Asymmetric Information

Galariotis E.C., Yusupov, N., and C. Villa, (2011) "Recent advances in lending to the poor with asymmetric information", Journal of Development Studies, 47, pp. 1371-1390

Posted: 21 Jan 2016

See all articles by Emilios C. Galariotis

Emilios C. Galariotis

Audencia Business School ; Audencia Nantes School of Management

Christophe Villa

Audencia Nantes School of Management

Nurmukhammad A. Yusupov

Independent

Date Written: July 1, 2010

Abstract

Microfinance institutions have successfully extended unsecured small loans to poor and opaque borrowers at the bottom of the economic pyramid. This success is largely due to innovative financial contracts that impose joint liability and create dynamic incentives to mitigate the effects of asymmetric information. Given recent advances in microfinance contracts, there is a need to map the theoretical developments. This article aims to accomplish that by performing a critical literature survey of microlending contracts, focusing on joint liability and dynamic incentives, bringing out some of the deficiencies of contract-theoretic propositions that cannot effectively account for the social mission of microfinance.

Suggested Citation

Galariotis, Emilios C. and Villa, Christophe and Yusupov, Nurmukhammad A., Recent Advances in Lending to the Poor with Asymmetric Information (July 1, 2010). Galariotis E.C., Yusupov, N., and C. Villa, (2011) "Recent advances in lending to the poor with asymmetric information", Journal of Development Studies, 47, pp. 1371-1390 , Available at SSRN: https://ssrn.com/abstract=2718871

Emilios C. Galariotis

Audencia Business School ( email )

8 Road Joneliere
BP 31222
Nantes Cedex 3, 44312
France

HOME PAGE: http://faculte-recherche.audencia.com/en/faculty/faculty-member-cvs/emilios-galariotis/

Audencia Nantes School of Management ( email )

France

HOME PAGE: http://faculte-recherche.audencia.com/en/faculty/faculty-member-cvs/emilios-galariotis/

Christophe Villa

Audencia Nantes School of Management ( email )

8 route de la Jonelière, BP 31222
Nantes Cedex 3, Cedex 3 44312
France

HOME PAGE: http://www.audencia.com/?id=970

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