Much of the existing literature on the use of informal credit arrangements such as ROSCAs (Rotating and Credit Saving Associations) theorises the use of such institutions as arising from market failures in the development of formal saving and credit mechanisms. As economic development proceeds,...

Empirical evidence on determinants of credit constraints and the amount borrowed by urban household in Sub-Saharan Africa is almost non-existent. Using an extended direct approach by virtue of the unique data set we have (the Fourth Round Ethiopian Urban Household Survey), we analysed the...

In transition and developing countries, we observe rather high levels of corruption even if they have democratic political systems. This is surprising from a political economy perspective, as the majority of people generally suffers from high corruption levels. Our model is based on the fact...

Entry for the Elgar Companion to Alfred Marshall, edited by Tiziano Raffaelli, Marco Dardi, and Giacomo Becatini, Cheltenham: Edward Elgar 2004

This paper aims to identify the effect of political exclusion on social capital in Colombia, suggesting social capital as an important channel through which political inequality has been central for Colombian economic development. I use the Colombian National Front agreement during 1958-1974 to...

We put forward a plausible explanation of African financial under-development in the form of a bad credit market equilibrium. Utilising an appropriately modified IO model of banking, we show that the root of the problem could be unchecked moral hazard (strategic loan defaults) or adverse...

This article examines whether or not the incomes of the poor systematically grow with average incomes, and whether financial development enhances the incomes of the poorest quintile. Following the methodology of Dollar & Kraay (2002), I find once extending Dollar & Kraay's data their findings...

Relational contracts have been shown to mitigate moral hazard in labor and credit markets. A central assumption in most theoretical and experimental studies is that, upon misbehaving, agents can be excluded from their current source of income and have to resort to less attractive outside...

Weak institutions are shown to create scope for public banks to play a growth-promoting role, even if such banks are less efficient than private banks.