Agenda

15 Apr 2019 12:30

Giorgia Barboni - Knowing what’s good for you

Meeting Room 1, Campus San Giobbe, Venezia

Titolo completo: Knowing what’s good for you: Can a repayment flexibility option in microfinance contracts improve repayment rates and business outcomes?

Giorgia Barboni - University of Warwick

Abstract: Repayment flexibility in microfinance contracts can enable clients to undertake higher return projects that have more irregular payment streams. But there is the risk of increased default due to time-inconsistent or excessively risky borrower behavior. How severe is this default risk and can it be mitigated simply by using contract price as a screening mechanism? To examine this we implement a randomized experiment with microfinance borrowers in Uttar Pradesh, India. In treated branches, borrowers select between the standard, rigid contract and a more expensive flexible contract. In control branches, customers are only offered the standard rigid contract. Clients in treated branches have higher repayment rates than control branches. We also find higher business sales in treatment compared to control group. Selection is an important mechanism – in treated branches, time-consistent and more financially disciplined borrowers are significantly more likely to opt for the flexible repayment schedule.

Lingua

L'evento si terrà in italiano

Organizzatore

Dipartimento di Economia (EcSeminars)

Link

http://www.giorgiabarboni.com/home/Welcome.html

Allegati

Paper 814 KB

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