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http://dspace.mediu.edu.my:8181/xmlui/handle/10419/19874| Title: | Cosigners Help |
| Keywords: | G21 O16 D82 ddc:330 credit default cosigner rosca |
| Issue Date: | 16-Oct-2013 |
| Publisher: | |
| Description: | We investigate how well social collateral does as an alternative to traditional physical collateral. We do so by studying cosigned loans - a borrower´s loan is backed by the personal guarantee of a cosigner. We use a regression discontinuity approach with data from South Indian bidding Roscas. Our main finding is that cosigners do indeed provide social collateral: doubling the number of cosigners halves the probability of arrears for high risk borrowers. We then distinguish between different theories of social collateral. Cosigners may be e¤ective as a monitoring device (a borrower would pay to rid herself of the nuisance of a cosigner) or as an insurance device (a borrower would pay for the benefit of a cosigner). We show that these two interpretations of cosigning have different empirical predictions in the context of a bidding Roscas. We find support for the insurance role of cosigners. |
| URI: | http://koha.mediu.edu.my:8181/xmlui/handle/10419/19874 |
| Other Identifiers: | http://hdl.handle.net/10419/19874 ppn:560906315 RePEc:zbw:gdec07:6541 |
| Appears in Collections: | EconStor |
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