What makes a credit group tick? In-group favouritism among microfinance clients
Microcredit clients are often assigned to credit groups with joint liability for loans. But what makes a credit group work well? What credit groups are likely to generate the internal social dynamics needed for group solidarity to form and repayment to happen? This is a matter of both group dynamics and individual characteristics, as some individuals conform more easily to in-group norms.
This brief presents an experiment conducted among microcredit clients in Angola. The results suggest that more educated clients and female clients are more likely to favour members of their credit group over outside demands.
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