eprintid: 10052420
rev_number: 23
eprint_status: archive
userid: 608
dir: disk0/10/05/24/20
datestamp: 2021-05-27 16:15:59
lastmod: 2021-12-23 23:09:36
status_changed: 2021-05-27 16:15:59
type: working_paper
metadata_visibility: show
creators_name: Aniket, K
title: Does Subsidising the Cost of Capital Really Help the Poorest? An Analysis of Saving Opportunities in
Group-Lending
ispublished: pub
divisions: UCL
divisions: B04
divisions: C04
keywords: Group-Lending, Microfinance, Savings, Outreach, Wealth
note: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
abstract: Saving opportunities can only be offered in group-lending by restricting the number of borrowers in a group, thus creating intra-group competition for loans. Our model predicts that this would lead to negative assortative matching along wealth lines (the wealthy would group with poorer individuals). We find that in a two member group, the borrower's wealth threshold for joining the group would be greater than the non-borrower's wealth threshold. The non-borrower's wealth threshold increases and the borrower's wealth threshold decreases with the cost of capital, thus widening the gap between the two thresholds. We thus highlight the two countervailing effects of subsidising the cost of capital, i.e., the trade-off between raising the wealth threshold for joining the group as a non-borrower and decreasing the expected time it would take to loosen the wealth deprived non-borrower's credit constraints.
date: 2007-02
date_type: published
publisher: School of Economics, the University of Edinburgh
official_url: https://www.ed.ac.uk/economics/research/discussion-papers
oa_status: green
full_text_type: pub
language: eng
primo: open
primo_central: open_green
verified: verified_manual
elements_id: 1568123
lyricists_name: Aniket, Kumar
lyricists_id: KANIK55
actors_name: Aniket, Kumar
actors_id: KANIK55
actors_role: owner
full_text_status: public
series: ESE Discussion Papers
number: 140
place_of_pub: Edinburgh, UK
pages: 32
citation:        Aniket, K;      (2007)    Does Subsidising the Cost of Capital Really Help the Poorest? An Analysis of Saving Opportunities in Group-Lending.                    (ESE Discussion Papers  140). School of Economics, the University of Edinburgh: Edinburgh, UK.       Green open access   
 
document_url: https://discovery.ucl.ac.uk/id/eprint/10052420/1/id140_esedps.pdf