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

Iglesias-Rios discusses dangers of COVID-19 outbreaks among Michigan farm workers

Stern comments on US history of forced sterilization in light of allegations about conditions in ICE custody

Schulenberg finds marijuana use at four decade high among young adults

More News

Highlights

Help Establish Standard Data Collection Protocols for COVID-19 Research

Prescott wins Distinguished University Innovator Award for foundation of Matterhorn online legal tool

More Highlights


Connect with PSC follow PSC on Twitter Like PSC on Facebook