GEOGRAPHICAL DISTANCE AND MORAL HAZARD IN MICROCREDIT: EVIDENCE FROM COLOMBIA

Andrea F. Presbitero; Roberta Rabellotti

doi:10.1002/jid.2901

journal article Feb 25, 2013

GEOGRAPHICAL DISTANCE AND MORAL HAZARD IN MICROCREDIT: EVIDENCE FROM COLOMBIA

Andrea F. Presbitero

Roberta Rabellotti

Journal of International Development Vol. 26 No. 1 pp. 91-108 · Wiley

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Abstract

AbstractRecent years have seen an intense and critical debate about the impact of microcredit on entrepreneurial activities and poor households' welfare. This paper suggests that information asymmetries in the ex post loan arrangement between the microfinance institution and local borrowers could partially explain the limited impact of microcredit. The physical distance separating borrowers from the microfinance institution could be considered as a proxy of agency costs, increasing the costs of monitoring and easing moral hazard. The estimation of the effect of distance on the borrower's self‐assessed outcome of a microcredit project in Colombia confirms the presence of moral hazard in the microcredit market, with agency costs increasing with geographical distance. Copyright © 2013 John Wiley & Sons, Ltd.

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Details

Published: Feb 25, 2013
Vol/Issue: 26(1)
Pages: 91-108
License: View

Authors

A

Andrea F. Presbitero

Department of Economics Università Politecnica delle Marche, Money and Finance Research group (MoFiR) and Centre for Macroeconomic and Finance Research (CeMaFiR) Italy

R

Roberta Rabellotti

Department of Political and Social Sciences Università di Pavia Italy

Cite This Article

Andrea F. Presbitero, Roberta Rabellotti (2013). GEOGRAPHICAL DISTANCE AND MORAL HAZARD IN MICROCREDIT: EVIDENCE FROM COLOMBIA. Journal of International Development, 26(1), 91-108. https://doi.org/10.1002/jid.2901

GEOGRAPHICAL DISTANCE AND MORAL HAZARD IN MICROCREDIT: EVIDENCE FROM COLOMBIA

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