Competition and Microfinance

@inproceedings{McIntosh2005CompetitionAM,
  title={Competition and Microfinance},
  author={Craig McIntosh and Diego Bruce Wydick and Xavier Gin{\'e}},
  year={2005}
}
Competition between microfinance institutions (MFIs) in developing countries has increased dramatically in the last decade. We model the behavior of non-profit lenders, and show that their non-standard objectives cause them to cross-subsidize within their pool of borrowers. As a result, when lenders with heterogeneous objectives compete, competition is likely to yield an outcome that makes poor borrowers worse off. As competition exacerbates asymmetric information problems over borrower… CONTINUE READING
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