Rules and Actions: Determinants of Peer Group and Staff Actions in Group-Based Microcredit Programs in the United States

This article examines the variety of program features and their impact on staff and participant behavior in peer group lending programs in the United States. The results show that program rules are consistent with the mission of these programs to enhance the access to business credit by creating opportunities and incentives for peer group members to engage in screening, monitoring, and enforcement functions of loan officers. Both peer groups and program staff performed important functions. Overall, program rules had tangible and intended effects on staff and peer group behavior. Program staff consistently performed as the program structure dictated. Program rules had differential impact on peer group actions. Peer screening appeared to be more random but had positive spillover effect on monitoring and enforcement. Peer monitoring was most responsive to program rules. Active peer enforcement followed peer screening and monitoring. More attention needs to focus on systematically encouraging peer group screening.