Compulsory versus Voluntary Savings as Incentive Mechanism in Microlending Contracts

Olivier Bruno (1) , Knar Khachatryan (1)

1 GREDEG - Groupe de Recherche en Droit, Economie et Gestion

This paper investigates the incentive mechanism of individual microlending contracts focusing particularly on microsavings. We built a model to show the role of compulsory and voluntary microsavings in addressing problems of information asymmetries. We show that voluntary savings can serve as a complementary tool in repayment enforcement at the same time inducing borrowers to reveal abilities of their projects.

Mots clés: Screening; Microfinance; Compulsory microsavings; Voluntary microsavings; Incentive mechanism; Repayment enforcement

Domaines: Economies et finances

Olivier Bruno, Knar Khachatryan. Compulsory versus Voluntary Savings as Incentive Mechanism in Microlending Contracts. 28e Journées Internationales d'Economie Monétaire, Jun 2011, Reading, United Kingdom. ⟨halshs-00723880⟩