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Applied Economics Letters Volume 16, 2009 - Issue 8
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Original Articles

Microfinance: equity and debt contracts

Amelia Correa Department of Economics, St. Andrew's College, University of Mumbai, Mumbai, 400 054, India
&
Romar Correa Department of Economics, University of Mumbai, Mumbai, 400 054, IndiaCorrespondence[email protected]
Pages 859-862 | Published online: 08 May 2009
 
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Abstract

We offer an explanation, drawn from first principles, of the belief that the consumption needs of the asset-poor are best met by debt contracts, whereas equity arrangements are tailored to the financing requirements of poor entrepreneurs.

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