| 1. |
- Ahlin, Christian, et al.
(författare)
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Loan contract structure and adverse selection : Survey evidence from Uganda
- 2020
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Ingår i: Journal of Economic Behavior and Organization. - : Elsevier BV. - 0167-2681 .- 1879-1751. ; 172, s. 180-195
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Tidskriftsartikel (refereegranskat)abstract
- While adverse selection is an important theoretical explanation for credit rationing it is difficult to quantify empirically. Many studies measure the elasticity of credit demand of existing or previous borrowers as opposed to the population at large; other studies use cross-sectional approaches that may confound borrower risk with other factors. We circumvent both issues by surveying a representative sample of microenterprises in urban Uganda and by measuring their responses to multiple hypothetical contract offers, varying in interest rates and collateral requirements. The two seminal theories on selection provide contradicting predictions following a change in the contractual terms. Under adverse selection, a lower interest rate or a lower collateral obligation should increase take up among less risky borrowers. By contrast, advantageous selection implies that take up should increase among the riskier borrowers. We test these two predictions by examining if firm owners respond to changes in the interest rate or the collateral requirement and whether higher take up varies by firms' risk type. We find support for the presence of adverse selection as contracts with lower interest rates or lower collateral obligations increase hypothetical demand - especially for less risky firms. Our results imply that changes to the standard loan product available to microenterprises may have substantial effects on credit demand.
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| 2. |
- Battaglia, Marianna, et al.
(författare)
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Repayment Flexibility and Risk Taking : Experimental Evidence from Credit Contracts
- 2023
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Ingår i: The Review of Economic Studies. - 0034-6527 .- 1467-937X.
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Tidskriftsartikel (refereegranskat)abstract
- A widely held view is that small firms in developing countries are prevented from making profitable investments by lack of access to credit and insurance markets. One solution is to provide repayment flexibility in credit contracts. Repayment flexibility eases both the credit constraint, as it allows for increased spending during the start-up phase, and offers insurance, in case of fluctuations in income. In a field experiment among traditional microfinance clients and larger collateralized borrowers in Bangladesh, we randomly assign the option to delay up to 2 monthly repayments at any point during a 12-month loan cycle. The flexible contract leads to substantial improvements in the traditional microfinance clients’ business outcomes, driven by borrowers in the upper tail of the distribution. In addition, we find a significant impact on socio-economic status, combined with lower default rates. We show theoretically and empirically that these effects are induced by an increase in entrepreneurial risk taking, implying that the primary mechanism is insurance provision. Repayment flexibility also attracts less risk-averse borrowers interested in business expansion. At the same time, the effects for the larger loan are much more modest. Our findings suggest that lack of insurance is an important constraint for small firms but that a simple financial product that increases repayment flexibility can be an effective tool for enabling enterprise growth.
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| 3. |
- Burchardi, Konrad B., et al.
(författare)
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Credit Constraints and Demand for Remedial Education : Evidence from Tanzania
- 2021
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Annan publikation (övrigt vetenskapligt/konstnärligt)abstract
- We study how credit constraints affect access to a remedial education program for girls. We gave an unconditional cash transfer to randomly selected households, then measured their Willingness To Pay (WTP) for the program. In the control group average WTP was 3,300 Tanzanian Shillings, seven percent of per-capita monthly expenditures. For those identified at baseline as able to borrow, the cash transfer increases WTP by three percent. For those unable to borrow, the cash transfer increases WTP by 27 percent. We conclude that credit constraints limit access to educational programs, and may increase inequality of outcomes.
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| 4. |
- Burchardi, Konrad B., et al.
(författare)
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Moral Hazard : Experimental Evidence from Tenancy Contracts
- 2019
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Ingår i: Quarterly Journal of Economics. - : Oxford University Press (OUP). - 0033-5533 .- 1531-4650. ; 134:1, s. 281-347
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Tidskriftsartikel (refereegranskat)abstract
- Agricultural productivity is particularly low in developing countries. Output-sharing rules that make farmers less-than-full residual claimants are seen as a potentially important driver of low agricultural productivity. We report results from a field experiment designed to estimate and understand the effects of sharecropping contracts on agricultural input choices, risk-taking, and output. The experiment induced variation in the terms of sharecropping contracts. After agreeing to pay 50% of their output to the landlord, tenants were randomized into three groups: (i) some kept 50% of their output; (ii) others kept 75%; (iii) others kept 50% of output and received a lump-sum payment at the end of their contract, either fixed or stochastic. We find that tenants with higher output shares used more inputs, cultivated riskier crops, and produced 60% more output relative to control. Income or risk exposure have at most a small effect on farm output; the increase in output should be interpreted as an incentive effect of the output-sharing rule. JEL Codes: O12, Q12, Q15.
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| 5. |
- Burchardi, Konrad B., et al.
(författare)
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Testing willingness to pay elicitation mechanisms in the field : Evidence from Uganda
- 2021
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Ingår i: Journal of Development Economics. - : Elsevier BV. - 0304-3878 .- 1872-6089. ; 152
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Tidskriftsartikel (refereegranskat)abstract
- Researchers frequently use variants of the Becker–DeGroot–Marschak (BDM) mechanism to elicit willingness to pay (WTP). These variants involve numerous incentive-irrelevant design choices, some of which carry advantages for implementation but may deteriorate participant comprehension or trust in the mechanism, which are well-known problems with the BDM. We highlight three such features and test them in the field in rural Uganda, a relevant population for many recent applications. Comprehension is very high, and 86 percent of participants bid optimally for an induced-value voucher, with little variation across treatments. This gives confidence for similar applications, and suggests the comprehension-expediency trade-off is mild.
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| 6. |
- Trommlerova, Sofia K., et al.
(författare)
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The Effect of Compulsory Schooling Expansion on Mothers' Attitudes Toward Domestic Violence in Turkey
- 2020
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Ingår i: World Bank Economic Review. - : Oxford University Press (OUP): Policy J - Oxford Open Option E. - 0258-6770 .- 1564-698X. ; 34:2, s. 464-484
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Tidskriftsartikel (refereegranskat)abstract
- An extensive literature examines the intergenerational spillover effects of education, but evidence on the causal effects of children's education on their parents' outcomes is scarce. This paper estimates the spillover effects of children's schooling on their mothers' attitudes toward domestic violence in Turkey. To identify the causal effect of children's schooling, we take advantage of a reform that took place in Turkey in 1997 and expanded compulsory schooling from five to eight years. Using a regression discontinuity design based on monthly birth cohorts and data from the 2008 and 2013 waves of the Turkey Demographic and Health Surveys, this paper shows that mothers whose eldest daughters were exposed to higher compulsory schooling are by 12 percentage points less likely to find domestic violence justifiable, which represents a decrease by 43 percent. We find no similar effect for boys' schooling. Our findings demonstrate that children's schooling can have impacts on their parents' attitudes, and such effects are likely to vary by the gender of the child.
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