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http://hdl.handle.net/10419/36765
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| Title: | | Behavioral foundations of microcredit: Experimental and survey evidence from rural India  |
| Authors: | | Bauer, Michal Chytilová, Julie Morduch, Jonathan |
| Issue Date: | | 2010 |
| Series/Report no.: | | Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 4901 |
| Abstract: | | Microcredit is an innovative financial tool designed to reduce poverty and fix credit market imperfections. We use experimental measures of time discounting and risk aversion for villagers in south India to highlight behavioral features of microcredit. Conditional on borrowing from any source, women with present-biased preferences are more likely than others to borrow through microcredit institutions. Microcredit contracts require loan repayments in regular, fixed installments and they harness peer pressure to encourage discipline. These innovations mirror mechanisms highlighted in behavioral approaches to saving, suggesting that microcredit's popularity stems partly from modes of encouragement and self-discipline absent in typical lending mechanisms. |
| Subjects: | | Time preference hyperbolic discounting self-control loan contracts microfinance |
| JEL: | | C93 D91 O12 |
| Document Type: | | Working Paper |
| Appears in Collections: | | IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)
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