Emergence of Financial Intermediaries in Electronic Markets: The Case of Online P2P Lending

We analyze the role of intermediaries in electronic markets using detailed data of more than 14,000 originated loans on an electronic P2P (peer-to-peer) lending platform. In such an electronic credit market, lenders bid to supply a private loan. Screening of potential borrowers and the monitoring of loan repayment can be delegated to designated group leaders. We find that these market participants act as financial intermediaries and significantly improve borrowers' credit conditions by reducing information asymmetries, predominantly for borrowers with less attractive risk characteristics. Our findings may be surprising given the replacement of a bank by an electronic marketplace.

Is providing micro-credit social responsible?

Micro-finance, which includes micro-credit as one it its services, has become big business with a range of models – from those that operate on a strictly business basis to those who come from a philanthropic base, through Non Government organisations (NGOs). Success is often measured by the numbers involved and the repayment rates – which are very high, largely because of the lending models used. The purpose of this paper is to identify whether the means used to deliver micro-credit services to the poor are socially responsible. This paper will explore the range of models currently used and propose a model that addresses some of the social responsibility issues that appear to plague delivery. The model is being developed in Beira, the second largest city in Mozambique. Mozambique exhibits many of the characteristics found in other African countries, so the model, if successful, may have implications for other poor African nations.

In the shadow of the welfare state : the role of payday lending in poverty survival in Australia

A defining characteristic of contemporary welfare governance in many western countries has been a reduced role for governments in direct provision of welfare, including housing, education, health and income support. One of the unintended consequences of devolutionary trends in social welfare is the development of a ‘shadow welfare state’ (Fairbanks, 2009; Gottschalk, 2000), which is a term used to describe the complex partnerships between statebased social protection, voluntarism and marketised forms of welfare. Coupled with this development, conditional workfare schemes in countries such as the United States, Canada, the UK and Australia are pushing more people into informal and semi-formal means of poverty survival (Karger, 2005). These transformations are actively reshaping welfare subjectivities and the role of the state in urban governance. Like other countries such as the US, Canada and the UK, the fringe lending sector in Australia has experienced considerable growth over the last decade. Large numbers of people on low incomes in Australia are turning to non-mainstream financial services, such as payday lenders, for the provision of credit to make ends meet. In this paper, we argue that the use of fringe lenders by people on low incomes reveals important theoretical and practical insights into the relationship between the mixed economy of welfare and the mixed economy of credit in poverty survival.

Intraspecific and interspecific social variation in the sweat bee Lasioglossum Malachurum and other members of the subgenus Evylaeus

Sweat bees exhibit a range of social behaviours, from solitary nesting, in which no workers are produced, to strong eusociality, in which workers exhibit a high degree of altruism, behaviour that is measured by the degree of personal reproductive sacrifice. Field studies were carried out for seven weeks during May-June 2000 in southern Greece in order to investigate intraspecific social variation, and test the hypothesis of a north-south cline of decreasing eusociality in the obligately eusocial sweat bee L. (E.) malachurum. A comparative study, using principal components analysis, was performed to determine if patterns of intraspecific social variation in L. malachurum reflect the patterns of social variation within the subgenus, Evylaeus, as a whole. The results of the field study reveal that, in Greece, two worker broods were produced followed by a third brood consisting of gynes, males and some workers, indicating that there was an overlap in worker and gyne production. There was strong caste distinction between queens and workers. Workers actively foraged and participated in nest construction as most workers (58%, n=303) had a high degree of mandibular wear. Workers did not participate in the oviposition of Brood 3 gynes since only 0.7% (n=278) of workers were mated. Furthermore, queen survival until the end of Brood 3 and a substantial size differential of 10.6% between queens and workers suggested that queen domination over worker behaviour during the early to mid-part of the colony cycle was plausible. Male production in Brood 3 by some workers was likely, since the timing of worker ovarian development corresponded with the timing of male production. These findings suggest that workers of the first two broods were primarily altruistic, but some (28%) Brood 1 (9%) and Brood 2 (19%) workers produced males, indicating that the degree of altruistic behaviour declined during the lifetime of the colony. In comparison with other L. malachurum populations in Europe, the Greek population of L. malachurum had a weaker social level as a result of the higher proportion of workers potentially involved in male production, thus 3 supporting the hypothesis of a southerly cline of decreasing eusociality. Furthermore, intraspecific variation in social level across Europe appears to be due to longer breeding seasons in more southerly locations that would promote the production of larger colonies and provide opportunities for workers to evade queen control. The comparative study using principal components analysis on 20 solitary (of the subgenera Evylaeus and Lasioglossum), eusocial and socially polymorphic Evylaeus species and populations reveals that six traits are closely associated with stronger eusociality in Evylaeus. These traits are: (1) a reduction in the proportion of males in the early brood(s); (2) a reduction in the proportion of females that mate; (3) an increase in the mean number of first brood workers; (4) a reduction in the proportion of females with developed ovaries; (5) an increase in size dimorphism between castes, and (6) nest guarding. These are traits that most significantly define principal component one and therefore distinguish social type as indicated by a clear separation of the eusocial and the solitary populations, with a socially polymorphic species falling in between. Furthermore, most of these traits are under foundress control and may suggest that the evolutionary loss or gain of eusociality is based on selection pressures on a founding female. Colony size and female ovarian development are common factors distinguishing social variation in L. malachurum and within the subgenus as a whole. The principal components analysis excluding the solitary species and the socially aberrant L. marginatum populations show the L. malachurum populations separated based on an increasing proportion of workers with developed ovaries as populations are found more south, lending further support to the hypothesis of a north-south cline of decreasing eusociality.

Vested interests in addiction research and policy alcohol industry use of social aspect public relations organizations against preventative health measures

Aim It has been proposed that alcohol industry ‘social aspects/public relations’ organizations (SAPROs) serve the agenda of lending credibility to industry claims of corporate responsibility while promoting ineffective industry-friendly interventions (such as school-based education or TV advertising campaigns) and creating doubt about interventions which have a strong evidence base (such as higher taxes on alcoholic beverages). This paper investigated whether submissions to Australia's National Preventative Health Taskforce (NPHT) from alcohol industry bodies regarding the Australian SAPRO, Drinkwise, have used this organization to demonstrate corporate responsibility while promoting industry-friendly interventions.

Method Submissions to the Australian National Preventative Health Taskforce (NPHT) discussion paper Australia, the healthiest country by 2020 (n = 375) were examined to identify those with primary alcohol content. A thematic analysis of the resulting 33 submissions was conducted to determine which organization, institution or individual discussed Drinkwise.

Setting Australia.

Findings Nine of the 33 submissions discussed Drinkwise; all were submitted by the alcohol industry or its affiliates. Every industry submission referred to Drinkwise either as providing evidence of social responsibility or by suggesting the industry-friendly actions of Drinkwise as alternatives to those recommended by the NPHT report.

Conclusions Drinkwise has been used by the alcohol industry to create an impression of social responsibility while promoting interventions that maintain profits and campaigning against effective interventions such as higher taxes on alcohol.

Is Group Lending A Good Enforcement Scheme for Achieving High Repayment Rates?: Evidence from Field Experiments in Vietnam

Microfinance institutions employ various kinds of incentive schemes but estimating the effect of each scheme is not easy due to endogeneity bias. We conducted field experiments in Vietnam to capture the role of joint liability, monitoring, cross-reporting, social sanctions, communication and group formation in borrowers’ repayment behavior. We find that joint liability contracts cause serious free-riding problems, inducing strategic default and lowering repayment rates. When group members observe each others’ investment returns, participants are more likely to choose strategic default. Even after introducing a cross-reporting system and/or penalties among borrowers, the default rates and the ratios of participants who chose strategic default under joint liability are still higher than those under individual lending. We also find that joint liability lending often failed to induce mutual insurance among borrowers. Those who had been helped or who had repaid a little in the previous round were more likely to default strategically and repay a little again in the current round and those who paid large amounts were always the same individuals.

The effect of gender context on children's social behaviour in a limited resources situation : an observational study

Knowing when to compete and when to cooperate to maximize opportunities for equal access to activities and materials in groups is critical to children's social and cognitive development. The present study examined the individual (gender, social competence) and contextual factors (gender context) that may determine why some children are more successful than others. One hundred and fifty-six children (M age=6.5 years) were divided into 39 groups of four and videotaped while engaged in a task that required them to cooperate in order to view cartoons. Children within all groups were unfamiliar to one another. Groups varied in gender composition (all girls, all boys, or mixed-sex) and social competence (high vs. low). Group composition by gender interaction effects were found. Girls were most successful at gaining viewing time in same-sex groups, and least successful in mixed-sex groups. Conversely, boys were least successful in same-sex groups and most successful in mixed-sex groups. Similar results were also found at the group level of analysis; however, the way in which the resources were distributed differed as a function of group type. Same-sex girl groups were inequitable but efficient whereas same-sex boy groups were more equitable than mixed groups but inefficient compared to same-sex girl groups. Social competence did not influence children's behavior. The findings from the present study highlight the effect of gender context on cooperation and competition and the relevance of adopting an unfamiliar peer paradigm when investigating children's social behavior.