Témata prací (Výběr práce)Témata prací (Výběr práce)(verze: 290)
Detail práce
   Přihlásit přes CAS
Group lending with peer monitoring: A theoretical model of microcredit
Název práce v češtině: Půjčky ve skupině s vzájemným monitorováním: Teoretický model mikrokreditu
Název v anglickém jazyce: Group lending with peer monitoring: A theoretical model of microcredit
Klíčová slova: microcredit, joint liability, group lending
Klíčová slova anglicky: microcredit, joint liability, group lending
Akademický rok vypsání: 2015/2016
Typ práce: diplomová práce
Jazyk práce: angličtina
Ústav: Institut ekonomických studií (23-IES)
Vedoucí / školitel: prof. Ing. Karel Janda, Dr., Ph.D., M.A.
Řešitel: skrytý - zadáno vedoucím/školitelem
Datum přihlášení: 24.05.2016
Datum zadání: 24.05.2016
Datum a čas obhajoby: 21.06.2017 08:30
Místo konání obhajoby: Opletalova - Opletalova 26, O206, Opletalova - místn. č. 206
Datum odevzdání elektronické podoby:18.05.2017
Datum odevzdání tištěné podoby:18.05.2017
Datum proběhlé obhajoby: 21.06.2017
Oponenti: Mgr. Magda Pečená, Ph.D.
 
 
 
Kontrola URKUND:
Zásady pro vypracování
Topic characteristics

The rise of microcredit in the developing countries has saved thousands of people from poverty. By introducing no collateral requirement and group liability, the lending scheme of microcredit denies the basic assumptions of common debt contracts. However, exactly thanks to these specificities, microcredit lending to the poor works where usual schemes fail. The providers of microcredit loans, most commonly NGOs and governmental agencies, differ in the way how they organize the group and structure the lending procedure. The loans may be provided simultaneously or sequentially within the group. In academia, the theorists initially inspected the joint liability feature to prove its positive impact on repayment rates (e.g., Besley and Coate, 1995). Later on, Ghatak (1999) and Van Tassel (1999) showed by modelling the group formation process that joint liability can induce peer selection of borrowers according to their types and, thus, help the lender screen the applicants. Unfortunately, none of these models deals with the possibility of moral hazard and the respective need for monitoring of the borrowers. This issue is raised by Ghatak and Guinnane (1999). Chowdhury (2005) formed a model with lender monitoring to conclude that traditional simultaneous financing is not feasible at all and, hence, it is dominated by sequential financing. Despite this result, microfinance institutions have operated the traditional scheme for several decades with moderate success. The model of Chowdhury (2005) may prove to be too restrictive as it takes the interest rate charged by the loan provider and the loan size as exogenous and homogeneous across groups. I aim to take the model of Van Tassel (1999), which does take these variables as endogenous and also allows for partial joint liability, and introduce costly state verification (monitoring) into the model.

Outline
1. Motivation: I will introduce the background and the story of microcredit, its successes and failures. Also, I will introduce the difference between traditional group lending and sequential.
2. Microcredit in theory: I will review the theoretical models of group lending and their implications, further, I will confront these models with empirical evidence.
3. The model with moral hazard: In this section I will introduce the economic environment of the model, its setup with moral hazard.
4. Simultaneous financing: This section will analyze the one period game of simultaneous group lending.
5. Sequential financing: This section will analyze the one period game of sequential group lending.
6. Discussion: Here, I comment on the results and compare them to relevant literature.
7. Conclusion: I will summarize my findings and their implications for microcredit policies and possible future research.
Seznam odborné literatury
Armendáriz, Beatriz, and Jonathan Morduch. The economics of microfinance. MIT press, 2010.
Navajas, Sergio, et al. "Microcredit and the Poorest of the Poor: Theory and Evidence from Bolivia." World development 28.2 (2000): 333-346.
Armendáriz de Aghion, Beatriz, and Jonathan Morduch. "Microfinance beyond group lending." Economics of transition 8.2 (2000): 401-420.
Besley, Timothy, and Stephen Coate. "Group lending, repayment incentives and social collateral." Journal of development economics 46.1 (1995): 1-18.
Chowdhury, Prabal Roy. "Group-lending: Sequential financing, lender monitoring and joint liability." Journal of development Economics 77.2 (2005): 415-439.
Ghatak, Maitreesh, and Timothy W. Guinnane. "The economics of lending with joint liability: theory and practice." Journal of development economics 60.1 (1999): 195-228.
Ghatak, Maitreesh. "Group lending, local information and peer selection."Journal of development Economics 60.1 (1999): 27-50.
Stiglitz, Joseph E. "Peer monitoring and credit markets." The world bank economic review 4.3 (1990): 351-366.
Van Tassel, Eric. "Group lending under asymmetric information." Journal of Development Economics 60.1 (1999): 3-25.
Předběžná náplň práce v anglickém jazyce
Motivation
The rise of microcredit in the developing countries has saved thousands of people from poverty. By introducing no collateral requirement and group liability, the lending scheme of microcredit denies the basic assumptions of common debt contracts. However, exactly thanks to these specificities, microcredit lending to the poor works where usual schemes fail. The providers of microcredit loans, most commonly NGOs and governmental agencies, differ in the way how they organize the group and structure the lending procedure. The loans may be provided simultaneously or sequentially within the group. In academia, the theorists initially inspected the joint liability feature to prove its positive impact on repayment rates (e.g., Besley and Coate, 1995). Later on, Ghatak (1999) and Van Tassel (1999) showed by modelling the group formation process that joint liability can induce peer selection of borrowers according to their types and, thus, help the lender screen the applicants. Unfortunately, none of these models deals with the possibility of moral hazard and the respective need for monitoring of the borrowers. This issue is raised by Ghatak and Guinnane (1999). Chowdhury (2005) formed a model with lender monitoring to conclude that traditional simultaneous financing is not feasible at all and, hence, it is dominated by sequential financing. Despite this result, microfinance institutions have operated the traditional scheme for several decades with moderate success. The model of Chowdhury (2005) may prove to be too restrictive as it takes the interest rate charged by the loan provider and the loan size as exogenous and homogeneous across groups. I aim to take the model of Van Tassel (1999), which does take these variables as endogenous and also allows for partial joint liability, and introduce costly state verification (monitoring) into the model.

Hypotheses
Hypothesis #1: Lending is feasible (i.e. equilibrium exists) in the traditional group lending scheme with moral hazard.
Hypothesis #2: Lending is feasible (i.e. equilibrium exists) in the sequential group lending scheme with moral hazard.
Hypothesis #3: The sequential financing equilibrium provides higher social welfare than the traditional setup.

Methodology
I plan to build a model based on the foundations of Van Tassel (1999), which is the most comprehensive model of group lending, and introduce costly state verification of the borrower’s project. This induces the need for monitoring the borrower as it is a typical example of ex-post moral hazard and agent-principal problem. I aim to solve the model and identify equilibria in this one period game. Firstly, in the perfect information environment (as a benchmark). Secondly, in the traditional simultaneous setting and, thirdly, in the scheme with sequential financing. Further, I am going to analyze and compare the social welfare in each setting to determine the most suitable model. As an ultimate objective, if applicable, I would like to add contingent renewal of the contract and social sanctions to my model as well and study its role and consequences.

Expected Contribution
All of the theoretical models of group lending with moral hazard assume the loan size and the interest rate to be exogenous and constant across groups. I am going to build the first model with moral hazard that takes them as endogenous and thus its results should be generally more valid. Moreover, I aim to inspect the behavior of the model with sequential financing and compare both setups. I also plan to comment on the role of partial joint liability extensively as it has not been analyzed with sequential financing at all. Altogether, this thesis should produce theoretical results which may have impact on the daily practice of microcredit intermediaries and the design of their products.

Outline
1. Motivation: I will introduce the background and the story of microcredit, its successes and failures. Also, I will introduce the difference between traditional group lending and sequential.
2. Microcredit in theory: I will review the theoretical models of group lending and their implications, further, I will confront these models with empirical evidence.
3. The model with moral hazard: In this section I will introduce the economic environment of the model, its setup with moral hazard.
4. Simultaneous financing: This section will analyze the one period game of simultaneous group lending.
5. Sequential financing: This section will analyze the one period game of sequential group lending.
6. Discussion: Here, I comment on the results and compare them to relevant literature.
7. Conclusion: I will summarize my findings and their implications for microcredit policies and possible future research.
 
Univerzita Karlova | Informační systém UK