Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/98216
Authors: 
Karlan, Dean
Osman, Adam
Zinman, Jonathan
Year of Publication: 
2013
Series/Report no.: 
Center Discussion Paper, Economic Growth Center 1034
Abstract: 
Identifying the impacts of liquidity shocks on spending decisions is difficult methodologically but important for theory, practice, and policy. Using seven different methods on microenterprise loan applicants, we find striking results. Borrowers report uses of loan proceeds strategically, and more generally their reporting depends on elicitation method. Borrowers also interpret loan use questions differently than the key counterfactual: spending that would not have occurred sans loan. We identify the counterfactual using random assignment of loan approvals and short-run follow-up elicitation of major household and business cash outflows, and estimate that about 100% of loan-financed spending is on business inventory.
Subjects: 
loan use
consumption
investment
liquidity constraint
liquidity shock
fungibility
microcredit
microenterprise
JEL: 
D12
D22
D92
G21
O12
O16
Document Type: 
Working Paper

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