Tag
underinvestment
2 findings
Finance & microfinanceCorporate Debt Maturity and Risk-TakingRigid short-term debt repayment schedules in microfinance act like corporate short-term debt constraints, preventing poor micro-entrepreneurs from making illiquid, high-return investments due to liquidity-driven underinvestment incentives.Expert TheoryFinance & microfinanceUnderinvestment via Contract DesignStandard rigid microfinance contracts achieve high repayment rates (over 95%) but induce underinvestment by constraining borrowers to low-yielding liquid projects, forfeiting an average 41.0% increase in long-run weekly profits (Rs 640.9 top-coded).Expert Theory