VULNERABILITY OF MICROFINANCE TO STRATEGIC DEFAULT AND COVARIATE SHOCKS: EVIDENCE FROM PAKISTAN

This paper investigates the repayment behavior of borrowers of a Pakistani microfinance institution (MFI) using a unique dataset of approximately 45,000 installment records over the period 1998–2007. In early 2005, the MFI introduced reforms that included improved enforcement of contingent renewal. The reforms led to a healthy situation with almost zero default rates. We hypothesize that strategic default under the joint liability mechanism was encouraged by weak enforcement of contingent renewal and was one of the factors responsible for the pre‐reform failure. To support this hypothesis, we show that before the reforms, a borrower's delay in installment repayment was correlated with other group members' repayment delays beyond the level explained by possible correlation of project failures due to locally covariate shocks. Such excessive correlation disappeared after the reforms, including the period after the 2005 Kashmir earthquake. The empirical evidence thus demonstrates the existence and seriousness of the strategic default under weak dynamic incentives.     

Does the Group Leader Affect Repayment Performance Differently?

Theoretical models of group lending assume that all group members are identical in terms of their effect on repayment performance. In practice, however, this may not be true. We use a unique data set obtained from a survey of 160 borrowing groups in Jordan to investigate the impact of joint liability, screening and monitoring activities, and social ties of the group leader and other group members on repayment performance as measured by the intensity of default using a negative binomial II model. Our results suggest that the joint liability and screening activities of the leader are more strongly related to repayment performance than the same variables for the rest of the group members. Social ties of all members have a significant effect on repayment, while monitoring activities have no effect.     

Joint-Liability in Microcredit: Evidence from Bangladesh

The joint-liability lending model in microcredit predicts social ties between groups of borrowers to incentivise repayment. However, it also promotes free riding behaviour. Repeated experimental games conducted in Bangladesh are used to empirically analyse key theoretical hypotheses predicted under joint-liability (repeated experimental games are conducted by the author on the field in Manikganj, Dhaka, Bangladesh in December 2014); treated groups of microcredit borrowers are compared to control groups of non-microcredit borrowers alongside questionnaire findings. Treated individuals forego short-run gains from non-repayment and benefit from higher long-run gains from progressing on to further rounds. The paper also finds that treated individuals are significantly less likely to free ride and more likely to shoulder for their partner compared to control individuals. Optimal individual and group characteristics to maximise repayment under joint-liability are then identified.     

Monetary Policy and Borrowers’ Loan Defaults: Research Based on Data from Renrendai

This paper uses Renrendai data to study the relationship between monetary policy and the default behavior of borrowers, and analyzes the transmission channels. The research shows that tight monetary policy will lead to a significant increase in a borrower's probability to default, and this effect will continue for several months. There may be two transmission channels: (i) monetary policy changes a debtor's liquidity through credit and balance sheet channels, which directly affects their current repayment behavior; and (ii) monetary policy may affect a borrower's investment, production and profitability, thus changing their long‐term solvency. The paper also finds that the repayment behavior of productive borrowers is more susceptible to monetary policy than consumptive borrowers, and that the default behavior of borrowers in coastal provinces is more susceptible to monetary policy than of borrowers in inland provinces. These findings provide new evidence for understanding how monetary policy affects individual behavior and its transmission mechanisms.     

THE SHORT-TERM POVERTY IMPACT OF SMALL-SCALE,COLLATERAL-FREE MICROCREDIT IN INDONESIA: A MATCHING ESTIMATOR APPROACH

Indonesian microfinance is primarily operated by for-profit commercial banks, characterized by large-scale loans that require collateral. In 2003, the largest nongovernmental organization in the country introduced much smaller-scale loans without a collateral requirement. This scheme is commercialized but potentially more suited to the credit demands of the poor. Applying propensity score matching with the difference-in-difference method, this paper examines whether the emerging microcredit scheme has been successful in targeting and improving the welfare of the poor in the one year following loan disbursement. The results show that although collateral ownership is not an important determinant of participation, relatively wealthier families gain access to microcredit. The impact of microcredit on various household outcomes is generally statistically insignificant, except for sales of nonfarm enterprises for the nonpoor and schooling expenditures for the poor. This implies that the microcredit scheme under study might not have an immediate impact on poverty alleviation.     

Microcredit,Social Capital,and Common Pool Resources

The paper presents a conceptual scheme for understanding the impact of microcredit—small loans to poor borrowers—on common pool resources. Impacts on common pool resources are posited to occur through changes in household production and consumption, the focus on women, and the social capital created from group training, decision-making, and risk-bearing with the group lending techniques characteristic of many microcredit programs. Enhanced human and social capital can improve environmental outcomes. A nonrandom survey of microfinance organizations suggests increased environmental awareness and potential CPR stewardship through microcredit, but empirical research is needed to demonstrate actual impacts.     

企业债务违约的成因和经济后果分析——以永城煤电和永泰能源为例

目前中国正处在高质量发展的重要转型阶段,发行债券对于企业来说是重要的融资方式。但随着债券市场快速发展,债务违约问题也愈演愈烈,引起了人们的广泛关注。选取永泰能源与永城煤电债务违约案例,以二者的还款意愿与还款能力为切入点进行分析,探究民企和国企债务违约的成因,以及债务违约对发债主体、市场和投资者所造成的经济后果,并针对债务违约的防范工作提出一些应对策略,希望为债务违约的研究提供思路。     

Formal and informal rural credit in the Mekong River Delta of Vietnam: Interaction and accessibility

This paper examines the factors influencing rural households’ access to credit in the Vietnamese market. Analysis confirms an interaction effect between informal and formal credit sectors in which informal credit positively influences accessibility to microcredit programs. Ignoring this interaction effect may lead to microcredit providers making loan decisions that are less than optimal. In the formal credit sector, the lowest income group faces more credit rationing than other groups, despite the fact that microcredit programs are designed to target households at the bottom of the income pyramid. Results demonstrate that land holding status, informal interest, and informal loan duration are important factors influencing access to informal credit. Factors influencing microcredit accessibility include local government employee status, credit group membership, a “poor” certificate, educational attainment, working skills and village road access. To reduce reliance on informal credit and improve microcredit accessibility, rural households should actively participate in a microcredit group.     

Microfinance in Times of Crisis: The Effects of Competition, Rising Indebtedness, and Economic Crisis on Repayment Behavior

This paper analyzes repayment determinants for loans from Caja Los Andes, a Bolivian microlender. The analysis focuses on the influence of recent changes in Bolivia. In particular, we examine the effects of the rapidly growing supply of microloans, the increasing competition, a rising level of indebtedness among microentrepreneurs, and the recent economic crisis. Our results show a twofold influence structure of competition and indebtedness. First, clients with loans from multiple sources at the same time are found to be more likely to default than others. Second, clients with given characteristics have an overall better repayment behavior in areas with higher competition and a higher supply of microloans.     

International Financial Contagion and the Fund —A Theoretical Framework

In this paper we provide a model of contagion in which countries are linked through the international capital market which allows borrowing and lending for consumption smoothing. Borrowing from the International Monetary Fund also provides a mechanism for countries to smooth consumption intertemporally. Facing a large shock that makes it impossible for a country simultaneously to achieve a desired minimum level of consumption and to service its foreign debt, the country will default. This will put some upward pressure on world interest rates, which raises the debt service costs of other indebted countries and can generate further rounds of defaults. In this environment the Fund has an important systemic function in lending to members to limit the extent of contagion and default. The Fund can be seen as internalizing the externality generated by the contagion that spreads through the channel of the world capital market that links all countries. JEL Classification Numbers: E44, E61, F33, F34     

中小企业联保贷款融资模式违约率研究

通过联保小组成员与银行之间的博弈分析,得出影响违约率的因素,并针对这些影响因素提出相应的建议,以帮助企业继续从银行获得贷款,同时帮助银行降低信用风险和操作风险。     

Demystifying Nonparticipation in Microcredit: A Population-Based Analysis

Given the current popularity of microcredit schemes as a means of poverty alleviation, their accessibility to the poorest is of obvious concern. This paper examines a targeted microcredit program in Bangladesh to assess its coverage among the poor, and to identify program- and client-related barriers impeding participation. A population survey of over 24,000 households reveals that although three-quarters are eligible for microcredit, less than one-quarter participate. Rates of participation in microcredit are higher among poorer households. Multivariate analysis identifies lack of female education, small household size and landlessness as risk factors for nonparticipation, based on a 7% random sample of this population. The implications of these findings for poverty alleviation policies and programs are discussed.     

Crony Capitalism and Sovereign Default

Cronyism provides policymakers with marked incentives to repay sovereign debt. This takes place at the expense of the average citizen who bears both steep costs of debt repudiation and high costs of debt service, as clientelism increases both financial fragility and the debt burden. The paper sets up a model of strategic debt default that nails down this point, with political distortions and where a representative agent can dismiss the government and overrule its decision. Economic hard times provide an opportunity to implement reforms fighting clientelism, as the implicit coalition between groups of cronies may break down. A model is built along these lines, which highlights cross-country contagion of debt repudiation.JEL Classification Numbers: F3, E6, D8     

Contagion and risk premia in the amplification of crisis: Evidence from Asian names in the global CDS market

In the turmoil of 2007–2009, troubles in a small segment of the US mortgage market escalated into a crisis of global proportions. A striking feature of the crisis is the contagion that hit Asia. In a region where direct exposures to problem mortgages were minimal, credit spreads for major borrowers widened even more than they did in Europe and the United States. We argue that the contagion was part of an amplification mechanism driven by valuation losses caused by the bursting of a global credit bubble. The valuation losses stemmed not so much from a reassessment of credit risks as from a global repricing of these risks. It was this repricing that was the main channel for contagion into Asian credit (and equity) markets. For empirical evidence, we analyze fluctuations in credit default swap (CDS) spreads and expected default frequencies (EDFs) for major Asian borrowers. We find that valuation losses on CDS contracts for these Asian borrowers arose in part from movements in global and region-specific risk pricing factors as well as from revisions to expected losses from defaults.     

Auditor Liability and Business Investment*

We model a firm's investment decision, an auditor's effort‐rendering behavior, audit fees, and prices of the firms under two auditor liability rules: strict liability and negligence liability. We show that an auditor's effort level is socially optimal under strict liability, while it is not generally so under negligence liability. Furthermore, both the firm owner's expected benefit and the audit fee are higher under strict liability than under negligence liability. We define the legal error under negligence liability as the difference between the assessed audit effort (that is, the estimate of audit effort made by the court) and the actual audit effort and prove that the greater the variance of the legal error, the more incentive an auditor has to exert effort under negligence liability compared with strict liability. Finally, the number of investments being undertaken could be higher under strict liability because more firm owners are willing to hire auditors to go public.     

担保，连带责任与小额信贷合同

文章通过建立委托代理模型,对农村小额信贷市场中担保贷款以及随机配对连带责任贷款的贷款合同设定进行了分析.现有研究缺乏对于担保贷款的分析,对连带责任贷款的分析也大多建立在正向配对的假设上.通过对担保贷款与连带责任贷款进行的模型化分析,得出了相应的次优合同信以及借贷双方的剩余.研究结论表明,担保贷款合同可以达到最优合同安排的状态,而随机配对的连带责任贷款仅能达到次优的资源配置效果.在推行连带责任贷款的同时,探索有效的担保形式,发展担保贷款,是小额信贷业务发展的有效途径.     

金融危机传染的信用路径

从信用理论来看,金融危机传染的内在路径,就是其传染的信用路径。通过分析发现,金融危机传染的信用路径共有四种:信用主体双向性传染、信用关系性传染、信用心欲性传染、信用信息性传染。一个国家受到他国传染而爆发金融危机往往是四种信用路径的传染同时作用的结果。     

Credit Contagion and Trade Credit: Evidence from Small Business Data in Japan

The present study investigates whether credit contagion leads to a decrease in trade credit for small businesses. In 1997–1998, the Japanese economy experienced a deep recession, and the domino effect caused an increase in the number of dishonored bills and bankruptcy filings. During a period of credit contagion, the possibility of default increases for firms with more financial claims and lower cash holdings. We find that during a recession, trade payables for small businesses with higher trade receivables and lower cash holdings are reduced. The hypothesis that the effects of credit risk on trade payables are weakened is not supported.     

Strategic default,multiple installments,and the role of informal moneylender in microcredit contract

I model the role of strategic defaults and informal moneylenders on multiple-installment loan contracts offered by microfinance institutions (MFIs). The results show that a single-installment loan is not viable due to MFIs' vulnerability to strategic defaults and borrowers' lack of collateral. In contrast, a multiple-installment contract requires borrowers to borrow from the moneylender, who is immune to strategic default, in order to repay the MFI's early installments that are due before the project yields a return. Consequently, both default costs and borrowing costs increase and incentives to commit strategic default decline, making the multiple-installment contract profitable for MFIs.     

小额信贷业务的偏差与规范

小额信贷在当前遭遇了发展困境，贷款余额逐年下降，究其原因在于小额信贷发展过程中出现了嫌贫爱富、期限偏短、扭曲运行这三大偏差，为保证小额信贷的健康发展，亟需还原小额信贷的本来特性，对运作细节进行调整，摆正政府的位置。