Credit Market Consequences of Improved Personal Identification: Field Experimental Evidence from Malawi

Publication Abstract

Gine, X., J. Goldberg, and Dean Yang. 2012. "Credit Market Consequences of Improved Personal Identification: Field Experimental Evidence from Malawi." American Economic Review, 102(6): 2923-2954.

We implemented a randomized field experiment in Malawi examining borrower responses to being fingerprinted when applying for loans. This intervention improved the lender's ability to implement dynamic repayment incentives, allowing it to withhold future loans from past defaulters while rewarding good borrowers with better loan terms. As predicted by a simple model, fingerprinting led to substantially higher repayment rates for borrowers with the highest ex ante default risk, but had no effect for the rest of the borrowers. We provide unique evidence that this improvement in repayment rates is accompanied by behaviors consistent with less adverse selection and lower moral hazard. (JEL D14, D82, G21, O12, O16)

10.1257/aer.102.6.2923

Country of focus: Malawi.

Browse | Search | Books | Next

PSC In The News

RSS Feed icon

Mitchell notes challenge of long term epigenetic human study design around pregnancy risks

Morenoff details How COVID-19 is Impacting Detroit Residents

More News

Highlights

Bloome wins a 2020 William Julius Wilson Early Career Award from Inequality, Poverty, and Mobility section of the ASA

Pfeffer recognized with William Julius Wilson Early Career Award from Inequality, Poverty, and Mobility section of the ASA

More Highlights


Connect with PSC follow PSC on Twitter Like PSC on Facebook