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Strategic Default In Joint Liability Groups: Evidence From A Natural Experiment In India, Xavier Gine, Karuna Krishnaswamy, Alejandro Ponce
Strategic Default In Joint Liability Groups: Evidence From A Natural Experiment In India, Xavier Gine, Karuna Krishnaswamy, Alejandro Ponce
Alejandro Ponce
Despite the high repayment rates claimed by microcredit programs around the world, some groups of borrowers eventually default and are subsequently disbanded. Exposure to common shocks and strategic default are reasons for the deterioration in group repayment but identification of the precise mechanism is difficult. In this paper we exploit an announcement issued by the Anjuman Committee of a town in southern India banning all Muslims from repaying their microfinance loans. Using administrative data we find that borrowers in Muslim-dominated groups have higher default rates after the announcement compared to the same borrowers with loans in Hindu-dominated groups. We conclude …
Education, Complaints, And Accountability, Juan Botero, Alejandro Ponce, Andrei Shleifer
Education, Complaints, And Accountability, Juan Botero, Alejandro Ponce, Andrei Shleifer
Alejandro Ponce
Better educated countries have better governments, an empirical regularity that holds in both dictatorships and democracies. A possible reason for this fact is that educated people are more likely to complain about misconduct by government officials and that more frequent complaints encourage better behavior from officials. Newly assembled individual-level survey data from the World Justice Project show that, within countries, better educated people are more likely to report official misconduct. The results are confirmed using other survey data on reporting crime and corruption. Citizen complaints might thus be an operative mechanism that explains the link between education and the quality …