Contracting constraints, credit markets and economic development
By: by Abhijit Banerjee
Contributors: Massachusetts Institute of Technology. Dept. of Economics
Series: Working paper series / Massachusetts Institute of Technology, Dept. of Economics -- working paper 02-17; Working paper (Massachusetts Institute of Technology. Dept. of Economics) -- no. 02-17.
Publisher: Massachusetts Institute of Technology, Dept. of Economics
Published: 2001
Place of publication: Cambridge, MA
Language: eng
Number of pages: 55
Description: This paper begins by summarizing the micro-evidence on credit markets from a large number of studies from all over the world, with the goal of identifying a number of stylized facts. We argue that, in particular, the evidence strongly suggests that for poor people in developing countries, imperfections in the credit market are quantitatively very important. We then build a simple model that explains the observed patterns, based on the idea that monitoring and screening borrowers have both fixed and variable costs. We go on to build a simple dynamic model that allows us to understand what the observations about the credit market imply for the evolution of the wealth distribution. Keywords: Credit Markets; Distribution; Growth. JEL Classification: O12, D82, D31.
Notes: "September 2001."

Includes bibliographical references (p. 47-55).

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