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- Title
Microfinance and missing markets.
- Authors
Shahe Emran, M.; Mahbub Morshed, A. K. M.; Stiglitz, Joseph E.
- Abstract
The existing theoretical analysis of microfinance focuses on the nature of the loan contract such as group liability. We draw attention to the role of missing or imperfect labour markets in understanding some of the important "second generation" debates in microfinance. Our analysis helps explain a number of puzzles in microfinance including high repayment rates with high interest rates, difficulties in scaling up projects, limited economic impact on borrowing households, low take‐up rates in recent microcredit programs, conflicting views about the interest rate elasticity of demand, and spurious mission drift. Microcredit can play a role when labour markets are underdeveloped, but it may also hinder structural transformation.
- Subjects
MICROFINANCE; INTEREST rates; ECONOMIC impact; ELASTICITY (Economics); LOAN agreements; LABOR market
- Publication
Canadian Journal of Economics, 2021, Vol 54, Issue 1, p34
- ISSN
0008-4085
- Publication type
Article
- DOI
10.1111/caje.12502