Give Me a Pass: Flexible Credit for Entrepreneurs in Colombia / Lasse Brune, Xavier Giné, Dean Karlan.

By:

Brune, Lasse

Contributor(s):

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w30634.Publication details: Cambridge, Mass. National Bureau of Economic Research 2022.Description: 1 online resource: illustrations (black and white)Subject(s):

Other classification:

Online resources:

Available additional physical forms:

Hardcopy version available to institutional subscribers

Abstract: Microcredit promised business growth for small firms lacking access to banking loans. Yet while reaching millions, recent randomized evaluations suggest limited average business impacts. Critics often blame contract rigidity, specifically the fixed and frequent installments, for the lack of productive risk-taking. But such rigidity may instill borrower discipline. We partnered with a Colombian lender that offered first-time borrowers a flexible loan that permitted delaying up to three monthly repayments. We find null effects for revenue and profits but increases in loan defaults. The evidence thus aligns with established microlender practice of offering rigid contracts to first-time borrowers.

Tags from this library: No tags from this library for this title. Log in to add tags.

Average rating: 0.0 (0 votes)

Holdings
Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
Working Paper	Biblioteca Digital	Colección NBER	nber w30634 (Browse shelf(Opens below))	Not For Loan

Total holds: 0

November 2022.

Microcredit promised business growth for small firms lacking access to banking loans. Yet while reaching millions, recent randomized evaluations suggest limited average business impacts. Critics often blame contract rigidity, specifically the fixed and frequent installments, for the lack of productive risk-taking. But such rigidity may instill borrower discipline. We partnered with a Colombian lender that offered first-time borrowers a flexible loan that permitted delaying up to three monthly repayments. We find null effects for revenue and profits but increases in loan defaults. The evidence thus aligns with established microlender practice of offering rigid contracts to first-time borrowers.