We design an experiment to study the role of (a)symmetry in the context of group lending with joint liability. The performance of joint-liability contracts crucially hinges on borrowers engaging in peer monitoring. We find that asymmetric contracts, in which monitoring is a dominant strategy for...

We design an experiment to study the effect of asymmetry in the context of group lending with joint liability. The performance of group loan contracts crucially hinges on borrowers engaging in peer monitoring and the common practice is to offer participants of a group loan symmetric contract...

We design an experiment to study the effect of asymmetry in the context of group lending with joint liability. The performance of group loan contracts crucially hinges on borrowers engaging in peer monitoring and the common practice is to offer participants of a group loan symmetric contract...

This paper characterizes an optimal group loan contract with costly peer monitoring. Using a fairly standard moral hazard framework, we show that the optimal group lending contract could exhibit a joint-liability scheme. However, optimality of joint-liability requires the involvement of a group...