SABIIA - Sistema Aberto e Integrado de Informação em Agricultura (Sabiia)

Morten, Melanie; Karlan, Dean S.; Zinman, Jonathan.

We worked with two microlenders to test impacts of randomly assigned reminders for loan repayments in the “text messaging capital of the world”. We do not find strong evidence that loss versus gain framing or messaging timing matter. Messages only robustly improve repayment when they include the loan officer’s name. This effect holds for clients serviced by the loan officer previously but not for first-time borrowers. Taken together, the results highlight the potential and limits of communications technology for mitigating moral hazard, and suggest that personal obligation/reciprocity between borrowers and bank employees can be harnessed to help overcome market failures.

Tipo: Working Paper

Palavras-chave: Microcredit; Microfinance; Randomized evaluation; Development finance; Consumer/Household Economics; Financial Economics; Research and Development/Tech Change/Emerging Technologies; D21; D92; G21; O16; O17.

Ano: 2012

URL: http://purl.umn.edu/121867

Elasticities of Demand for Consumer Credit

The price elasticity of demand for credit has major implications for macroeconomics, finance, and development. We present estimates of this parameter derived from a randomized trial. The experiment was implemented by a consumer microfinance lender in South Africa and identifies demand curves that, while downward-sloping with respect to price, are flatter than recent estimates in both developing and developed countries throughout most of a wide price range. However, demand becomes highly price sensitive at higher-than-normal rates. We discuss several interpretations of this kink and present some related evidence. We also find that loan size is far more responsive to changes in loan maturity than to changes in interest rate. This pattern is more pronounced...

Expanding Credit Access: Using Randomized Supply Decisions to Estimate the Impacts

Palavras-chave: Credit markets; Microfinance; Demand elasticity; Development finance; Maturity elasticity; Consumer credit; Liquidity constraints; Consumer/Household Economics; Demand and Price Analysis; D1; D9; E2; G2; O1.

Ano: 2005

URL: http://purl.umn.edu/28485

Expanding credit access is a key ingredient of development strategies worldwide. Microfinance practitioners, policymakers, and donors have ambitious goals for expanding access, and seek efficient methods for implementing and evaluating expansion. There is less consensus on the role of consumer credit in expansion initiatives. Some microfinance institutions are moving beyond entrepreneurial credit and offering consumer loans. But many practitioners and policymakers are skeptical about unproductive lending. These concerns are fueled by academic work highlighting behavioral biases that may induce consumers to over borrow. We estimate the impacts of a consumer credit supply expansion using a field experiment and follow-up data collection. A South African...

Expanding Microenterprise Credit Access: Using Randomized Supply Decisions to Estimate the Impacts in Manila

Palavras-chave: Financial Economics.

Ano: 2007

URL: http://purl.umn.edu/9279

Microcredit seeks to promote business growth and improve well-being by expanding access to credit. We use a field experiment and follow-up survey to measure impacts of a credit expansion for microentrepreneurs in Manila. The effects are diffuse, heterogeneous, and surprising. Although there is some evidence that profits increase, the mechanism seems to be that businesses shrink by shedding unproductive workers. Overall, borrowing households substitute away from labor (in both family and outside businesses), and into education. We also find substitution away from formal insurance, along with increases in access to informal risk-sharing mechanisms. Our treatment effects are stronger for groups that are not typically targeted by microlenders: male and...

Getting to the Top of Mind: How Reminders Increase Saving

Palavras-chave: Microfinance; Microcredit; Microentrepreneurship; Risk sharing; Formal and informal finance; Financial Economics; O1; D1; D2 G2.

Ano: 2009

URL: http://purl.umn.edu/52600

Karlan, Dean S.; McConnell, Margaret; Mullainathan, Sendhil; Zinman, Jonathan.

We develop and test a simple model of limited attention in intertemporal choice. The model posits that individuals fully attend to consumption in all periods but fail to attend to some future lumpy expenditure opportunities. This asymmetry generates some predictions that overlap with models of present-bias. Our model also generates the unique predictions that reminders may increase saving, and that reminders will be more effective when they increase the salience of a specific expenditure. We find support for these predictions in three field experiments that randomly assign reminders to new savings account holders.

Observing Unobservables: Identifying Information Asymmetries with a Consumer Credit Field Experiment

Palavras-chave: Intertemporal consumer choice; Savings; Attention; Consumer/Household Economics; Financial Economics; D91; E21.

Ano: 2010

URL: http://purl.umn.edu/92001

Information asymmetries are important in theory but difficult to identify in practice. We estimate the empirical importance of adverse selection and moral hazard in a consumer credit market using a new field experiment methodology. We randomized 58,000 direct mail offers issued by a major South African lender along three dimensions: 1) the initial "offer interest rate" appearing on direct mail solicitations; 2) a "contract interest rate" equal to or less than the offer interest rate and revealed to the over 4,000 borrowers who agreed to the initial offer rate; and 3) a dynamic repayment incentive that extends preferential pricing on future loans to borrowers who remain in good standing. These three randomizations, combined with complete knowledge of the...

What's Advertising Content Worth? Evidence from a Consumer Credit Marketing Field Experiment

Palavras-chave: Information asymmetries; Field experiment; Adverse selection; Moral hazard; Development finance; Credit markets; Microfinance; Financial Economics; C9; D8; G2; G3; O1.

Ano: 2005

URL: http://purl.umn.edu/28482

Bertrand, Marianne; Karlan, Dean S.; Mullainathan, Sendhil; Shafir, Eldar; Zinman, Jonathan.

Firms spend billions of dollars each year advertising consumer products in order to influence demand. Much of these outlays are on the creative design of advertising content. Creative content often uses nuances of presentation and framing that have large effects on consumer decision making in laboratory studies. But there is little field evidence on the effect of advertising content as it compares in magnitude to the effect of price. We analyze a direct mail field experiment in South Africa implemented by a consumer lender that randomized creative content and loan price simultaneously. We find that content has significant effects on demand. There is also some evidence that the magnitude of content sensitivity is large relative to price sensitivity....

What's Psychology Worth? A Field Experiment in the Consumer Credit Market

Palavras-chave: Economics of advertising; Economics & psychology; Behavioral; Economics; Cues; Microfinance; Institutional and Behavioral Economics; Marketing; D01; M31; M37; C93; D12; D14; D21; D81; D91; O12.

Ano: 2009

URL: http://purl.umn.edu/47038

Bertrand, Marianne; Karlan, Dean S.; Mullainathan, Sendhil; Shafir, Eldar; Zinman, Jonathan.

Numerous laboratory studies report on behaviors inconsistent with rational economic models. How much do these inconsistencies matter in natural settings, when consumers make large, real decisions and have the opportunity to learn from experiences? We report on a field experiment designed to address this question. Incumbent clients of a lender in South Africa were sent letters offering them large, short-term loans at randomly chosen interest rates. Psychological features on the letter, which did not affect offer terms or economic content, were also independently randomized. Consistent with standard economics, the interest rate significantly affected loan take-up. Inconsistent with standard economics, the psychological features also significantly affected...

You Can Pick Your Friends, But You Need to Watch Them: Loan Screening and Enforcement in a Referrals Field Experiment

Palavras-chave: Behavioral economics; Psychology; Microfinance; Marketing; Field experiment; Credit markets; Consumer/Household Economics; D01; C93; D12; D21; D81; D91; M37; O12.

Ano: 2005

URL: http://purl.umn.edu/28441