Credit III The Classic Microcredit Model This section introduces the structure and key features of microfinance , especially in the context of moral hazard and institutional design. Here’s a concise breakdown: Key Features of Microfinance Institutions (MFIs): Target Borrowers: Typically lend to women (though some also lend to men). Focused on very poor individuals or households. Loan Structure: Small initial loans , e.g., $200. Repaid in frequent, small installments (e.g., weekly $4.80 payments for 50 weeks). Loan size increases slowly over time (~10% real growth per year), providing dynamic incentives . Group Lending with Joint Liability: Borrowers are grouped (e.g., 5–10 people). Joint liability means members are responsible for each other’s loans. In practice, this is often enforced via future loan eligibility (not legal action). If one defaults, others may be denied future loans . Meetings and Monitoring: Regular group me...