Learning by Association: Micro Credit in Chiapas, Mexico

Micro credit programs provide institutional arrangements for low‐income people to transit from nonmarket to market‐oriented settings. This article develops a data set of payment records to determine micro credit participants' behavior on repayment performance. The findings shed new light strongly supporting micro credit as a feasible alternative to successfully provide financial resources to the poor, when controlling for asymmetric information. The empirical evidence indicates that learning by association through peer mentoring is a significant determinant in explaining high repayment rates, whereas peer monitoring is not. (JEL O1, O17, L31, J15)