Question

With microfinance, the mechanism of ________ is a way to avoid the problem of imperfect information.

Answer 1

peer lending

Step-by-step explanation:

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

Imperfect information is when parties to a transaction do not have the same amount of information.

Peer lending is when a borrower is matched with a lender. Information about the borrower is disclosed to the lender. Such information includes :

personal credit quality

1. age
2. name
3. education
4. gender

this helps to reduce imperfect information