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 · 5 citations
Economics, Econometrics and Finance · Business, Management and Accounting · #Banking stability, regulation, efficiency #Cooperative Studies and Economics #Microfinance and Financial Inclusion

paper · doi:10.2307/2118471

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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Related

• L. Albert Hahn's Economic Theory of Bank Credit
• ‘Whatever is, is right’? Economic institutions in pre‐industrial Europe¹
• Nonmarket Institutions for Credit and Risk Sharing in Low-Income Countries
• Giving Credit Where It Is Due
• Costly Monitoring, Loan Contracts, and Equilibrium Credit Rationing