In this hybrid research seminar on Thursday October 23rd, 2025 at 12:00 pm by Dr. Francesco Cecchi — will present his research titled "Reviving Joint Liability Contracts: Asymmetric Joint Liability Loans and Moral Hazard".
Abstract:
A key limitation of traditional joint liability loans lies in their symmetric structure, which can undermine peer monitoring and generate coordinated defaults. We propose that a contractual innovation in the form of asymmetry by designating one group member as an incentivised lead borrower can enhance peer monitoring and mitigate moral hazard. We develop structural models of group lending with ex-ante and ex-post moral hazard (investment diligence and strategic default) and evaluate both frameworks through a lab-in-the-field experiment with micro-finance clients in urban Bolivia. Our experimental results show that asymmetric contracts significantly increase peer monitoring by 17–20% in both moral hazard scenarios.
The zoom link to join the seminar online can be found here. This event is open to the public. All who are interested to this topic are very welcome to join the seminar. After the presentation there will be time for questions and discussion.
For any queries related to our UNU-MERIT Seminar Series, please contact Lizeth Melissa Molina Alvarez and Karthika Baby Sujatha by sending an email to seminars@merit.unu.edu.
