This review provides a common framework for researchers thinking about the next generation of micro-founded macro models of growth, inequality, and financial deepening, as well as direction for policy makers targeting microfinance programs to alleviate poverty. Townsend covers topics such as the treatment...

Theories rationalizing joint liability lending are rich in implications for repayment rates; this paper exploits this fact to test four diverse models. Ahlin and Townsend show that the models’ repayment implications do not always coincide. For example, higher correlation of output and borrowers’ ability...