Research Insights: Do Better-Connected Community Members Benefit More from Subsidized Credit?
More powerful and less productive households, both in terms of wealth and connections, ended up obtaining more credit from a community-based lending program. Informal markets partially attenuated these targeting distortions by redirecting credit from connected to unconnected households, albeit at higher rates. Despite the targeting distortions, a community-based approach may still be more appealing than other centralized criteria to target credit. Eliminating the connection-based advantage may lead to village-level gains in terms of equity and output.
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Bibliographic Details
| Main Author: |
Inter-American Development Bank |
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| Other Authors: |
Diego A. Vera-Cossio |
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| Language: | English |
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| Published: |
Inter-American Development Bank
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| Subjects: | Credit Market,
Microfinance,
Decentralization,
Informal Credit,
Bank Loan,
Entrepreneurship,
Interest Rate,
D14 - Household Saving; Personal Finance,
G21 - Banks • Depository Institutions • Micro Finance Institutions • Mortgages,
O12 - Microeconomic Analyses of Economic Development,
O16 - Financial Markets • Saving and Capital Investment • Corporate Finance and Governance,
O17 - Formal and Informal Sectors • Shadow Economy • Institutional Arrangements,
L14 - Transactional Relationships • Contracts and Reputation • Networks,
Z13 - Economic Sociology • Economic Anthropology • Social and Economic Stratification, |
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| Online Access: | http://dx.doi.org/10.18235/0003594
https://publications.iadb.org/en/research-insights-do-better-connected-community-members-benefit-more-subsidized-credit
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