Competitive microcredit markets: differentiation and ex ante incentives for multiple borrowing

We analyse an oligopolistic microcredit market characterized by asymmetric information on the riskiness of borrowers. We study the effects of competition when, due to the absence of credit bureaus, small entrepreneurs can borrow from more than one institution. We show how contract design can influence the ex ante incentives for multiple borrowing. Our model predicts that, under some conditions, a screening strategy based on contract differentiation and credit rationing can avoid multiple borrowing.

Jaar van publicatie:2015

BOF-keylabel:ja

IOF-keylabel:ja

BOF-publication weight:0.5

CSS-citation score:1

Authors from:Higher Education

Toegankelijkheid:Closed