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ABSTRACT
The Israeli Moshavim were agricultural cooperative associations grouped into regional procurement associations, operated under a mechanism of joint liability lending until the 1985 debt-crisis. Unique historical financial-panel-data offers behavioural insights into the joint liability group lending, through constructing Moshavim’s Debt-To-Output (DTO) ratio distribution. The right-tailed exponential distribution captures the finding that a small portion of the Moshavim were debtors. A semi-parametric model synthesises between the debtors and the creditors. While a joint liability mechanism might boost risk-receptiveness and excessive optimism concerning the peer’s accountability for some, it carries a reversed effect for others. Thus, the failure of the mechanism might be unavoidable.
Acknowledgments
The authors would like to thank Prof. Benjamin Bental for his contribution to this research and Prof. Doron Sonsino for his helpful remarks.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1. Chudik et al., Is There a Debt-Threshold Effect, 135.
2. Kislev, Lerman and Zusman, Experience with Credit Cooperatives; and Rosenthal and Eiges, Agricultural cooperatives, 1–29.
3. Basu and Stiglitz, Sovereign debt and joint liability, F115–30.
4. Townsend, Village and Larger Economie, 199.
5. Banerjee, Besley and Guinnane, The Neighbour’s Keeper, 491–515; Besley and Coate, Group Lending, 1–18; Ghatak, Group Lending, Local Information, 27–50.
6. Ahlin and Townsend, Using Repayment Data, F11–51; Ghatak, Group Lending, Local Information, 27–50; Besley and Coate, Group Lending, 1–18; Buchenrieder et al., Repayment Performance Under Joint Liability; Kritikos and Vigenina, Key Factors of Joint-Liability, 213–38; and Stiglitz, Peer Monitoring, 351–66.
7. Basu and Stiglitz, Sovereign debt and joint liability, F127.
8. Attanasio et al., The Impacts of Microfinance, 90.
9. Abramitzky, The Mystery of the Kibbutz, 79–86.
10. One of the basic ideological principles of the moshav called upon members to work only within the community. Over time, the ideological bounds have weakened. See Kimhi (1998) for a detailed discussion of the influence of ideological commitment in the moshav on time allocation of the farmers.
11. Schwartz, Israeli Moshav cooperative, 147.
12. Charness, Gneezy and Imas, Experimental methods, 43–51.
13. The Moshav’s age was calculated as the difference between 1980 and year of establishment.
14. Cowell and Van Kerm, Wealth Inequality: A Survey, 610–710.
15. Cowell and Van Kerm, Wealth Inequality: A Survey, 610–710; and Cowell and Victoria-Feser, Modelling Lorenz curves, 241–55.
16. See note 14 above.
17. Lilliefors, On the Kolmogorov-Smirnov Test, 38–389.
18. Ibid., 387.
19. Chudik et al., Is There a Debt-Threshold Effect, 135–50.
20. Leiser, Azar and Hadar, Psychological construal, 769.
21. Weinstock and Sonsino, Are risk-seekers more optimistic? 237.
22. Ibid., 249.
23. Cowell and Van Kerm, Wealth Inequality: A Survey, 699.
24. Prelec and Loewenstein, Mental Accounting of Savings, 4–28.
25. Prelec and Loewenstein, Mental Accounting of Savings, 25.
26. Liang and Zeger, Longitudinal data analysis, 4–28.
27. Ballinger, Using Generalised Estimating Equations, 127–50; Horton and Lipsitz, fit generalised estimating equation, 160–69; and Li and Redden, Small sample performance, 281–96.
28. Chudik et al., Is There a Debt-Threshold Effect, 135.
29. Charness, Gneezy and Imas, Experimental methods, 43–51; Gneezy and Potters, Risk Taking, 631–45; Kahneman and Tversky, Prospect theory, 263–92; and Tavor, Risk aversion, 726–39.
30. Tsiropoulos, Eurobonds, 1–29.
31. Flatnes and Carter, mandatory collateral requirement, 199–214.
32. Charness, Gneezy and Imas, Experimental methods, 43–51.
Additional information
Notes on contributors
Sagit Barel-Shaked
Sagit Barel-Shaked is Lecturer at the Department of Economics, Western Galilee College, Akko, Israel.
Rachel Lipshits
Rachel Lipshits is Lecturer at the Department of Industrial Engineering and Management, ORT Braude College of Engineering, Karmiel, Israel.