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Market structure and borrower welfare in microfinance

de Quidt, Jonathan, Fetzer, Thiemo and Ghatak, Maitreesh (2018) Market structure and borrower welfare in microfinance. The Economic Journal, 128 (610). pp. 1019-1046. ISSN 0013-0133

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Identification Number: 10.1111/ecoj.12591


Motivated by recent controversies surrounding the role of commercial lenders in microfinance, and calls for regulation of the sector, we analyse borrower welfare under different market structures, considering a benevolent non-profit lender, a for-profit monopolist and a competitive credit market. To understand the magnitude of the effects analysed, we simulate the model with parameters estimated from the MIX Market database. Our results suggest that market power can have severe implications for borrower welfare, while despite possible enforcement externalities competition typically delivers similar borrower welfare to non-profit lending.

Item Type: Article
Official URL:
Additional Information: © 2018 Royal Economic Society
Divisions: Economics
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Date Deposited: 05 Jun 2018 12:09
Last Modified: 20 Oct 2021 00:04
Projects: B2014-0460:1
Funders: Economic and Social Research Council, Handelsbanken’s Research Foundations, Konrad Adenauer Foundation, LSE, CAGE, University of Warwick, STICERD

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