This paper investigates the ways in which microfinance provision can unravel and yield perverse outcomes that run counter to its stated objective. It presents a theoretical challenge to the Stiglitzian notion that large endowments of social capital induce inexpensive peer‐monitoring efforts...

This paper investigates the ways in which microfinance provision can unravel and yield perverse outcomes that run counter to its stated objective. It presents a theoretical challenge to the Stiglitzian notion that large endowments of social capital induce inexpensive peer-monitoring efforts...