[Séminaire CREM] Social Capital and Product Design in Banking: The case of Microbanks - Faculté Des Sciences Economiques

Social Capital and Product Design in Banking: The case of Microbanks co-écrit avec S. A. Nyarko, R. Mersland

Mitigating information asymmetry is the key issue in banking. Using data from microbanks, we study whether such organizations adapt their product designs according to the prevailing level of social capital in their countries of operation. Microbanks rely on social capital to a greater extent than regular banks since they target clients who often lack traditional collateral. We find that higher levels of social capital are associated with a lower likelihood of employing information asymmetry mitigating mechanisms, such as group lending, mandatory savings, and nonfinancial services. These results are robust to using alternative datasets, social capital metrics, and estimation models.