Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts
Dean Karlan,Jonathan Zinman +1 more
TL;DR: In this article, the impacts of expanding access to consumer credit at a 200% annual percentage rate (APR) using a field experiment and follow-up data collection were investigated.
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Abstract: Expanding access to commercial credit is a key ingredient of financial development strategies. There is less consensus on whether expanding access to consumer credit helps borrowers, particularly when loans are extended at high interest rates. Popular skepticism about "unproductive," "usurious" lending is fueled by research highlighting behavioral biases that may induce overborrowing. We estimate the impacts of expanding access to consumer credit at a 200% annual percentage rate (APR) using a field experiment and follow-up data collection. The randomly assigned marginal loans produced significant net benefits for borrowers across a wide range of outcomes. There is also some evidence that the loans were profitable. The Author 2009. Published by Oxford University Press on behalf of The Society for Financial Studies. All rights reserved. For Permissions, please e-mail: journals.permissions@oxfordjournals.org, Oxford University Press.
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Figures
Table 2 Experiment validity and compliance 
Table 1 Demographics 
Table 5 Treatment effects on credit bureau scores one and two years later Dependent variable: 1 = any ordinal 1 = any ordinal 
Table 3 Intention-to-treat effects on borrowing and access 
Table 6 Estimated profitability of marginal and inframarginal loans 
Table 4 Intention-to-treat estimates for summary index outcome measures
Citations
Financial literacy among small and medium enterprises in Zimbabwe
Margaret Mashizha,Mabutho Sibanda,Blessing M. Maumbe +2 more
- 12 Nov 2019
TL;DR: In this article, a quantitative cross-sectional research design was employed, with data collected by means of a questionnaire administered to a sample of 384 SMEs in Harare and Bindura districts.
Microfinance and poverty reduction: Evidence from Djibouti
TL;DR: In this paper , a composite index of multi-dimensional poverty and carry out estimations using a number of econometric techniques was constructed using data on 2,060 borrower and non-borrower households based in six major urban centers of Djibouti and showed that neither access to micro-credit nor its ostensibly productive use is associated with poverty regardless of the duration of time since the loan was acquired.
Financial Accessibility and Interest Rates in the Informal Credit Market in India
Lissette Briones,Victoria Chiseliov,E. Gushchin,Jon Guttesen,Kannan Narayanaswamy +4 more
- 15 Jan 2024
TL;DR: New bank branch openings in India have significantly reduced lending rates in the informal credit market.
Consumer Credit: Too Much or Too Little (or Just Right)?
Jonathan Zinman
TL;DR: Research on consumer credit markets suggests a lack of convincing evidence on whether markets err, with theories and empirical tests inconclusive on whether markets oversupply or undersupply credit, highlighting the need for further investigation.
Hoping to Win, Expected to Lose: Theory and Lessons on Micro Enterprise Development
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TL;DR: This study proposes a model explaining why microenterprises exist despite economic theories predicting otherwise, and tests it with an experiment in Ghana and a meta-analysis of 18 other experiments, finding mixed support for the theory.
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