This study assesses the performance and impact of microfinance from group lending schemes with joint liability in Malawi. The study applies econometric models to technology adoption by farm households and to moral hazard and intra-group risk sharing to address the following objectives: to determine factors influencing the incidence of moral hazard among credit groups, to examine the extent to which intra-group insurance occurs, to investigate its underlying determinants, to assess the impact of households’ access to credit on the adoption of hybrid maize among households that vary in their credit constraints, and to assess the effect of credit on risk attitudes. The study recommends a number of microfinance policies as a way of improving performance and impact of microfinance.

The Author: Franklin Simtowe received his Bachelor of Science in Agriculture and his Master of Science in Agricultural Economics from the University of Malawi. He conducted his Ph.D. studies at the Center for Development Research at the University of Bonn and the University of Hohenheim. He graduated from the University of Hohenheim in 2006. The author currently works as an Impact Assessment Economist at the Africa Rice Center (WARDA) in Benin.