New Economics Papers
on Microfinance
Issue of 2012‒07‒01
two papers chosen by
Aastha Pudasainee and Olivier Dagnelie

  1. Regulation and supervision of microfinance institutions: an example of cooperative credit society By FOUNANOU, Mathurin/M; RATSIMALAHELO, Zaka/Z
  2. Social Capital, Network Effects and Savings in Rural Vietnam By Newman, Carol; Tarp, Finn; Van Den Broeck, Katleen

  1. By: FOUNANOU, Mathurin/M; RATSIMALAHELO, Zaka/Z
    Abstract: We study the optimal regulation of a cooperative credit society which has private information on the intrinsic quality of its loan portfolio (adverse selection) and where the cooperative’s choice of effort to improve this quality cannot be observed by the regulator (moral hazard). We characterize the optimal contracts offered by the regulator to the credit cooperatives. We have been able to show that the optimal contracts depend on 3 main factors namely: on the accuracy of the supervisor’s signal, the likelihood of facing a high quality credit cooperative, and the cost of supervision.
    Keywords: Microfinance; Informational asymmetry; optimal incentive contract; regulation; supervision
    JEL: G28 G10 G21
    Date: 2012–03
  2. By: Newman, Carol; Tarp, Finn; Van Den Broeck, Katleen
    Abstract: Information failures are a major barrier to formal financial saving in low income countries. Households in rural communities often lack the information necessary to set up formal deposit accounts or are uncertain about the returns to saving formally. In t
    Keywords: household savings, social capital, information failure, women.s unions, Vietnam
    Date: 2012

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