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Journal of Indian Institute of Management Bangalore

IIM Bangalore offers Degree-Granting Programmes, a Diploma Programme, Certificate Programmes and Executive Education Programmes and specialised courses in areas such as entrepreneurship and public policy.

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Journal Article: ‘Microfinance Group Processes and Crises: Responses to Economic and Psychological Threats’ - Prof. Rajalaxmi Kamath

Rajluxmi Kamath

Abstract: We examine micro-finance institutions (MFI) group processes simulating potential default by members, often the tipping point of crises. Using structural equation methods to develop measurement models and experimental methodology to test causal effects of economic and psychological threats we effectively capture the risks perceived by individual borrowers. We defined these threats in terms of a given financial loss and reputation loss. The results show that members make the subtle distinction between different types of peer pressure and joint liability. We also show that psychological threats perceived by borrowers are key to understanding MFI group processes, especially as triggers to a repayment crisis.

Authors’ Names: Anjana Dube and Rajalaxmi Kamath

Journal Name: Journal of Development Studies

Volume, Issue, Page Numbers: Vol. 55(10), 2019, Pg. 2273-2285

URL: https://www.tandfonline.com/doi/full/10.1080/00220388.2018.1539475

Journal Article: ‘Microfinance Group Processes and Crises: Responses to Economic and Psychological Threats’ - Prof. Rajalaxmi Kamath

Abstract: We examine micro-finance institutions (MFI) group processes simulating potential default by members, often the tipping point of crises. Using structural equation methods to develop measurement models and experimental methodology to test causal effects of economic and psychological threats we effectively capture the risks perceived by individual borrowers. We defined these threats in terms of a given financial loss and reputation loss. The results show that members make the subtle distinction between different types of peer pressure and joint liability. We also show that psychological threats perceived by borrowers are key to understanding MFI group processes, especially as triggers to a repayment crisis.

Authors’ Names: Anjana Dube and Rajalaxmi Kamath

Journal Name: Journal of Development Studies

Volume, Issue, Page Numbers: Vol. 55(10), 2019, Pg. 2273-2285

URL: https://www.tandfonline.com/doi/full/10.1080/00220388.2018.1539475