Baland, J.-M., Somanathan, R. and Wahhaj, Z. (2013) Repayment Incentives and the Distribution of Gains from Group Lending. Journal of Development Economics, 105, 131-139.
https://doi.org/10.1016/j.jdeveco.2013.07.008

has been cited by the following article:

• TITLE: The Role of Group Size and Correlated Project Outcomes in Group Lending

  AUTHORS: Marina Markheim

  KEYWORDS: Microfinance, Group Lending, Strategic Default, Group Size, Correlated Credit Risk

  JOURNAL NAME: Theoretical Economics Letters, Vol.7 No.5, July 21, 2017

  ABSTRACT: This paper analyzes contract efficiency with regard to correlated project realization and the size of the borrowers in group lending. Firstly, I show that under the standard assumption of independent project payoffs, the expected group cost of default decreases with group size. Secondly, I show that small groups can also optimize group efficiency if individual payoffs and credit risks are correlated. The results outline that social cost minimization occurs due to a common interest in forming optimal borrower groups between lenders and borrowers.