Thy Neighbor's Keeper: The Design of a Credit Cooperative with Theory and a Test

1994/05/01 by A. V. Banerjee, Abhijit Banerjee, Timothy Besley +3 · 560 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Banking stability, regulation, efficiency #Cooperative Studies and Economics #Economics #Law and economics #Management #Microfinance and Financial Inclusion #Sociology #Test (biology)

paper · doi:10.2307/2118471

published in The Quarterly Journal of Economics 109(2), 491-515 (Oxford University Press)

openalex publication_date 1994/05/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/03

Abstract

Economists now appreciate that resource allocation in less economically developed economies is profoundly influenced by nonfirm economic institutions. However, our theories of nonfirm institutions often suggest different answers to many questions including those of policy. This paper illustrates a method for discriminating between alternative theories using data from German credit cooperatives from nineteenth and early twentieth century Germany. We build a model of credit cooperatives designed to provide monitoring incentives and test this using nineteenth century data.

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