Abstract/Details

Credit risk management and rules: The experience of group -based microcredit programs in the United States


1999 1999

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Abstract (summary)

Access to credit is a persistent problem in low-income communities across the US. Various public policy initiatives have been taken to deal with this issue. Recently, collaborative efforts of the public, private, and nonprofit sectors have resulted in micro-credit programs that serve very small businesses called microenterprises.

This dissertation focuses on peer group lending programs in the United States, a type of micro-credit institutions that used a group mechanism to facilitate the administration of loan transactions. This type of group-based micro-lending institutions is borrowed from similar experiences in less developed countries. This study provides a framework to discuss the credit risk management potentials of various credit institutions in dealing with the intertemporal information problems in a loan transaction. The varieties of rules adopted in peer group lending programs are categorized as boundary rules, information rules, authority rules, and payoff rules. The screening, monitoring, and enforcement activities undertaken by the program staff and clients are analyzed in relation to the incentives and opportunities embedded in these rules and the relevant contexts. Then, the dissertation discusses the effectiveness of the programs in maintaining low delinquent and default rates in relation to the pattern of screening, monitoring, and enforcement activities, as well as to the relevant contexts.

Data for the study is drawn from surveys of the staff and participants of about 25 peer group lending programs in the US. The full data set has responses from about 50 staff members and 200 program participants in about 50 peer groups. The findings in this dissertation suggest that the intended group level interactions take place as active group screening, monitoring, and loan enforcement activities in response to program rules, especially the empowerment rules that assign authority and access to information. The resulting accumulation of social capital among peer group members cannot be denied. The program staff also plays prominent roles in the operation of these programs. The effectiveness of the staff and peer group actions to enhance loan performance is, however, not as obvious.

Indexing (details)


Subject
Public administration;
Welfare
Classification
0617: Public administration
0630: Welfare
Identifier / keyword
Social sciences, Credit risk management, Microcredit programs, Rules, Social capital
Title
Credit risk management and rules: The experience of group -based microcredit programs in the United States
Author
Hung, Chi-kan Richard
Number of pages
230
Publication year
1999
Degree date
1999
School code
0093
Source
DAI-A 61/08, Dissertation Abstracts International
Place of publication
Ann Arbor
Country of publication
United States
ISBN
9780599872264, 0599872268
Advisor
Parks, Roger B.
University/institution
Indiana University
University location
United States -- Indiana
Degree
Ph.D.
Source type
Dissertations & Theses
Language
English
Document type
Dissertation/Thesis
Dissertation/thesis number
9980995
ProQuest document ID
304540311
Copyright
Database copyright ProQuest LLC; ProQuest does not claim copyright in the individual underlying works.
Document URL
http://search.proquest.com/docview/304540311
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