A Study Of Group-lending Based On Member Heterogeneities

For the widely use of group-lending in the world, and it's important role in fighting against property, promoting the economic growth in developing countries, it's very valuable for us to pay much attentions in group-lending in both theory and in practice. It is with great meaning to find out that to what content the efficiency can reach and what aspects can influence these efficiencies. However, it is a pity to see that there are many un-efficiencies in the study of group lending. Firstly, most of these studies have point out that group-lending has great power in solving the " Four Problems " in finance sector, but they have not answer the question that whether the group-lending is a strong dominant institution against personal lending? Secondly, the studies since now have not explain the fact that why most use of group-lending institution are in countries, why this "Excellent" institution can not be widely used in cities? Thirdly, for the restraints of default assumptions, normal studies can not give useful suggestions to the finance sector.Pointing at these questions, by using theoretical and practice methods, this issue studies the relative advantages of group-lending and personal lending under the angel of member heterogeneities, we also studied the difference of countries and cities, we give some advises to the finance sector at last.We conclude my studies as follows:(1)By studying the collateral effect, the peer monitoring theory, we find out that there is no absolute advantage relation between group-lending and personal lending. The problems of monitoring cost and possibilities of peer monitoring and direct monitoring, are the main aspects which influence the efficiencies of group-lending and personal lending.(2)Member heterogeneities will have many influences in the group-lending efficiency in group-lending institutions.The adjustment costs coming from the member social identities may cause adverse selections in group-lending. The social assets in societies, the stability of social ties will directly affect the costs of constructing a group, it will also influence the incentives of the leaders, and the efficiencies of group-lending. Creating dynamic incentives in group-lending will get many advantages, such as diminishing the strategic defaults in group-lending constructions.(3) Because there are many difference between countries and cities, such as the crossing areas in lives, the aspects that can be influenced together, the existing or not of the un-money punishment methods, make the big difference in social ties and dynamic incentives between countries and cities. Those difference will have great impact on the efficiency of group-lending.(4)The probabilities of liability that the members should take is determined by the probabilities of investment. It is not sure that the probabilities of safe-member will less than the risk-member.(5)The member heterogeneities ,especially the heterogeneities of risks will affect the efficiency of group-lending very much. If the heterogeneities in members is high enough, the bank can screening out the enterprises by offering different contracts. It will get a efficiency market. The successful use of group-lending can not rely on any single screening mechanism.At last ,this issue runs an experiment to study the aspects that mentioned above. All the conclusions are backed up by our experiment.