ÿþ<html> <head> <title>Discussion Paper 06-01</title> </head> <body> <center><a href="workingpapers.html">Discussion Papers in Economics</a></center> <p><center> Planning Unit, Indian Statistical Institute, Delhi</center></p> <p>#06-01: <p><center><b>"Group-lending with Sequential Financing,Contingent Renewal and Social Capital." </b><br> By Prabal Roy Chowdhury </center> <p><center><i>Abstract</i></center></p> <p>This paper focuses on the dynamic aspects of group-lending, in particular sequential financing and contingent renewal. We examine the ecacy of these two schemes in harnessing social capital. We find that, for the appropriate parameter configurations, there is homogenous group-formation so that the lender can ascertain the identity of a group without lending to all its members, thus screening out bad borrowers partially. Moreover, under certain parameter configurations, negative assortative matching occurs as a robust phenomenon. </p> <a href="dp06-01.pdf">Full-Text</a> </body> </html>