Microfinance
In trying to achieve its aim of alleviating poverty, Microfinance often lends to group of poor, where each member of the group is jointly liable to each other. This means that each member is responsible for ensuring that all the other members of the group repay too. If one member fails to repay, the members of the group are also held in default. Joint liability solves the information and enforcement problems associated with credit markets by encourage screening, monitoring, costly state verification and contract enforcement.
Read more about this topic: Joint And Several Liability