Does Enforcing Loan Repayment Help or Hurt Poor Borrowers?

Garance Genicot in the Department of Economics at Georgetown University discussed what the welfare impact is of a change in the level of enforcement in credit markets. An improvement in the judicial system that makes it easier for lender to pursue defaulting borrowers is an example of an improvement in enforcement. In contrast, a policy that limits the liability of defaulting borrowers for instance (bankruptcy laws) or a ban on bonded labor for instance can be thought as a decrease in enforcement. Discussants included Xavier Giné of the Research Department, World Bank and Adrian Gonzalez of Microfinance Information eXchange (MIX).

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