Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282578 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16451
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
Digital loans are a source of fast, short-term credit for millions of people. While digital credit broadens market access and reduces frictions, default rates are high. We study the role of the speed of delivery of digital loans on repayment. Our study uses unique administrative data from a digital lender in Mexico and a regression-discontinuity design. We show that reducing loan speed by doubling the delivery time from ten to twenty hours decreases the likelihood of default by 21%. Our findings suggest that selectively slowing down credit could improve lender profitability and help consumers avoid default.
Subjects: 
digital credit
waiting periods
defaults
financial access
JEL: 
D14
D18
G51
O16
Document Type: 
Working Paper

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