With microfinance, the mechanism of ________ is a way to avoid the problem of imperfect information.
A) requiring no collateral
B) peer lending
C) making only small loans
D) accepting savings deposits

Question

Quizplus · Accepted Answer

Peer lending in microfinance involves groups of borrowers who guarantee each other's loans. This mechanism helps mitigate the problem of imperfect information because group members often have better knowledge about each other's creditworthiness and financial situations, encouraging responsible borrowing and repayment.

With Microfinance, the Mechanism of ________ Is a Way to Avoid