Group lending with heterogeneous types

Gan, Li; Hernandez, Manuel A. and Liu, Yanyan. 2013. Group lending with heterogeneous types. IFPRI Discussion Paper 1268. Washington, DC: International Food Policy Research Institute. https://hdl.handle.net/10568/153507

Group lending has been widely adopted in the past thirty years by many microfinance institutions as a means to mitigate information asymmetries when delivering credit to the poor. This paper proposes an empirical method to address the potential omitted-variable problem resulting from unobserved group types when modeling the repayment behavior of group members.