Refinancing a mortgage is often one of the biggest and most important financial decisions that people make. Borrowers need to choose the interest rate differential at which to refinance and, when that differential is reached, they need to take the steps to refinance before rates change again. The optimal differential is where the interest saved by refinancing equals the sum of refinancing costs...

*The ideas expressed here do not represent the opinions of the Board of Governors of the Federal System, or its staff. Part of this project was developed, and much of the early data collected, with Mikari Kashima at the Bank of Japan.

This study is to assess the necessity of capacity building of borrower before taking the microcredit. The common agents for human capacity building are training, coaching, consulting, academic education, referrals, research etc. The impact of training has been assessed in this research. This study has been conducted on the basis of primary and secondary data. Some questionnaires have been devel...

We test the predictions of several recent theories of how bank capital affects the rates that banks charge their borrowers. Key to all these theories is the notion that the relative bargaining power of a bank and its borrower are critical. We find that banks with low capital are more sensitive to borrower cash flow than are banks with high capital: lowcapital banks charge relatively more for bo...

We develop a model of repeated microcredit lending to study how group size affects optimal group-lending contracts with joint liability. In the setting being studied, a benevolent lender provides microcredit to a group of borrowers to invest in projects. The outcome of each risky project is not observable by the lender; therefore, if some of the borrowers default on their loan repayments, the l...

This paper studies peer-to-peer (p2p) lending on the Internet. Prosper.com, the first p2p lending website in the US, matches individual lenders and borrowers for unsecured consumer loans. Using transaction data from June 1, 2006 to July 31, 2008, we examine what information problems exist on Prosper and whether social networks help alleviate the information problems. As we expect, data identifi...

I compare welfare generated by a credit contract with individual liability and a contract with joint liability. The problem is credit rationing caused by limited liability and unobservable investment decisions. Joint liability induces borrowers to monitor each other, however the lender can also monitor. I show that wealthier borrowers may prefer riskier investments when liability is joint, whic...

Gender discrimination in accessing financial resources is a mounting concern in developing countries, but empirical evidence of such discrimination is limited. Using data collected from PPdai.com, one of the largest P2P lending platforms in China, we investigate potential gender discrimination in online P2P credit lending market in China. The results illustrate that female borrowers are more li...

This study extends research on the social performance of microfinance institutions. The research methodology is based on Grameen Progress out of Poverty Index™ (PPI™) for Cambodia applied to a sample of borrowers randomly extracted from a Cambodian microfinance institution's loan portfolio. Dataset has been directly collected through in-house interviews. Main questions discussed here are: (1) I...

We develop a structural econometric model to capture the decision dynamics of human evaluators on an online micro-lending platform, and estimate parameters using real-world dataset. find two types biases in gender, preference-based bias belief-based bias, are present evaluators' decisions. Both favor female applicants. Through counterfactual simulations, we quantify effect gender loan granting ...