GROUP LENDING WITH HETEROGENEOUS TYPES Academic Article uri icon

abstract

  • 2017 Western Economic Association International This paper proposes and implements a mixture structure to model repayment behavior in group lending with unobserved group heterogeneity. We discuss the model properties and identification and estimate the model using a rich dataset from a group lending program in India. The estimation results support the existence of two different group types: responsible and irresponsible groups. We find that the effects of the factors driving repayment behavior differ across types. The model also shows a higher predictive performance than standard probabilistic models, particularly in the identification of potential defaulters. We provide evidence supporting the robustness of our estimations. (JEL O16, C35).

published proceedings

  • Economic Inquiry

author list (cited authors)

  • Gan, L. i., Hernandez, M. A., & Liu, Y.

publication date

  • January 1, 2018 11:11 AM

publisher