Joint-liability borrowing decisions under risk: empirical evidence from rural microfinance in Ethiopia

G. Berhane Tesfay, C. Gardebroek

Research output: Chapter in Book/Report/Conference proceedingAbstract

Abstract

This paper investigates borrowing decisions of rural households from a microfinance in Tigray, Ethiopia using household panel data on 5 years and a dynamic panel probit model. The theoretical model takes two types of risk involved in jointliability lending explicitly into account: risk of partner failure and the risk of losing future access to credit. Empirical results show that these risks are important in explaining borrowing decisions. Another finding is that the probability of repeatborrowing is higher than the probability of new participation, with possible implications that perceived joint-liability threats deter participation and easing stringent punishments might help poor households¿ access to credit.
Original languageEnglish
Title of host publicationThe XIIth Congress of the European Association of Agricultural Economists (EAAE), People, Food and Environments: Global Trends and European Strategies, 26 - 29 August, 2008, Ghent, Belgium
Place of PublicationGent
PublisherEAAE
Pages247
Publication statusPublished - 2008
Event12th EAAE Congress: People, Food and Environments: Global Trends and European Strategies - Ghent
Duration: 26 Aug 200829 Aug 2008

Conference

Conference12th EAAE Congress: People, Food and Environments: Global Trends and European Strategies
CityGhent
Period26/08/0829/08/08

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    Berhane Tesfay, G., & Gardebroek, C. (2008). Joint-liability borrowing decisions under risk: empirical evidence from rural microfinance in Ethiopia. In The XIIth Congress of the European Association of Agricultural Economists (EAAE), People, Food and Environments: Global Trends and European Strategies, 26 - 29 August, 2008, Ghent, Belgium (pp. 247). EAAE. http://ageconsearch.umn.edu/bitstream/44202/2/347a.pdf