Household, Group, and Program Factors in Group-Based Agricultural Credit Delinquency

Survey data collected from agricultural credit groups and households in Chile are used to evaluate four aspects of group control over delinquency: group incentives; group actions; group composition; and their relationship to household characteristics, especially those concerning risk. Previous studies' estimates of their effects on delinquency are ambiguous. Evidence here shows that group cohesion develops over time and reduces delinquency, while group size and heterogeneity have no effect. Group mean investment returns and access to risk-reducing irrigation are more significant predictors of low delinquency than household deviation from group mean returns, highlighting the importance of risk management by households and groups.