Items where Author is "Sabin, Nicholas"

It is known that greater social cohesion increases a group’s ability to enforce cooperation. Despite this, defectors often go unpunished and groups with social structures that are a priori favorable often fail. A critical distinction is required between the structural effect on ability versus willingness to punish. We develop a theoretical framework in which variation in a group’s social structure generates a tension between ability and willingness to enforce cooperation. Structures that promote ability to punish also often reduce interest in carrying out sanctions, thus changing collective outcomes. Our empirical analysis involves a well-defined cooperative dilemma: group lending in Sierra Leone. We complement statistical modelling, based on a dataset containing 5,487 group repayments, with ethnographic analysis. We find: (1) Structural cohesion only increases economic cooperation between borrowers to a point, beyond which unwillingness outweighs increased ability to punish, reducing group repayments. (2) Groups with disconnected subgroups perform worse on average. Although borrowers are more willing to punish defectors in the out-subgroup, they are unable to do so effectively.

Modern microfinance, a field reaching over 200 million clients worldwide, is undergoing considerable change. The market structure is shifting with organizations increasingly accessing commercial funding through both private placements and initial public offerings. Some markets have overheated and produced substantial criticism, exemplified by the crisis in Andhra Pradesh, India. Recent impact evaluations of microcredit in diverse countries, such as Bosnia, Mexico, and Morocco, are raising similar questions about what microfinance actually can achieve and how it can best meet the needs of the poor. The basic offering is being rethought in terms of products and services, with increased attention on microsavings, microinsurance, and mobile banking. The field can best be characterized as being in a state of flux, with institutions moving in new and, at times, contentious directions.
This chapter is an overview of the current field of microfinance, drawing on both practitioner and academic resources. Sections 1 and 2 provide a brief introduction and clarification of microfinance terminology. Section 3 places microfinance in its historical context, reviewing predecessors such as informal community associations and state-owned development banks. Section 4 describes how the modern microfinance movement began in the 1970s and grew to its present form. In Section 5, the current landscape is then characterized in terms of scale, geographic coverage, institution size, and organizational type. Sections 6 through 8 summarize the most fundamental ongoing debates in microfinance: the critical features of modern microfinance; the appropriate role of commercialization; and the assessment of microfinance's impact. Sections 9 and 10 conclude with implications for the broader field of social finance based on lessons learned from the microfinance movement to date. Throughout the chapter, vignettes are included to illustrate the trends and concepts.