Institutional Affiliation: Nanyang Technological University
|Lending to the Unbanked: Relational Contracting with Loan Sharks|
with , , : w26400
We study roughly 11,000 loans from unlicensed moneylenders to over 1,000 borrowers in Singapore and provide basic information about this understudied market. Borrowers frequently expect to repay late. While lenders do rely on additional punishments to enforce loans, the primary cost of not repaying on time is compounding of a very high interest rate. We develop a very simple model of the relational contract between loan sharks and borrowers and use it to predict the effect of a crackdown on illegal moneylending. Consistent with our model, the crackdown raised the interest rate and lowered the size of loans.
|Does Competition Eliminate Discrimination? Evidence from the Commercial Sex Market in Singapore|
with , : w20911
The street sex worker market in Geylang, Singapore is highly competitive. Clients can search legally at negligible cost. Sex workers discriminate based on client ethnicity despite an excess supply of sex workers. Workers are more (less) likely to approach and ask a higher (lower) price of Caucasians (Bangladeshis), based on their perceived willingness to pay. They avoid Indians, set a significantly higher price and are less likely to reach an agreement with them, suggesting that Indians face taste discrimination. These findings remain even after controlling for prostitute fixed effects and are consistent with the workers' self-reported attitudes and beliefs.
Published: Huailu Li & Kevin Lang & Kaiwen Leong, 2018. "Does Competition Eliminate Discrimination? Evidence from the Commercial Sex Market in Singapore," The Economic Journal, vol 128(611), pages 1570-1608. citation courtesy of