nep-mfd New Economics Papers
on Microfinance
Issue of 2022‒01‒17
two papers chosen by
Olivier Dagnelie
Université de Caen

  1. Unlocking the Benefits of Credit through Saving By Sanghamitra W. Mukherjee; Lauren F. Bergquist; Marshall Burke; Edward Miguel
  2. Randomization for Causality, Ethnography for Mechanisms: Illiquid Savings for Liquor in an Autarkic Society By Ricardo Godoy; Dean Karlan; Jonathan Zinman

  1. By: Sanghamitra W. Mukherjee; Lauren F. Bergquist; Marshall Burke; Edward Miguel
    Abstract: Access to microcredit has been shown to generate only modest average benefits for recipient households. We study whether other financial market frictions—in particular, lack of access to a safe place to save—might limit credit's benefits. Working with Kenyan farmers, we cross-randomize access to a simple savings product with a harvest-time loan. Among farmers offered a loan, the additional offer of a savings lockbox increased farm investment by 11% and household consumption by 7%. Results suggest that financial market frictions can interact in important ways and that multifaceted financial access programs might unlock dynamic household gains.
    JEL: G50 O13 O16
    Date: 2021–12
  2. By: Ricardo Godoy; Dean Karlan; Jonathan Zinman
    Abstract: What should researchers do when confronted with surprising results? Financial access innovations usually leave “temptation” spending unaffected or reduced. However, we found that promotion of savings lockboxes in a largely autarkic society increased alcohol consumption and blood pressure, despite no one reporting intentions to save for alcohol. To probe mechanisms that could explain this pattern, we then used ethnographic methods, including direct observations of drinking (“scans”) and debriefing interviews to discuss the earlier trial results. We learn that sponsoring drinks confers prestige, but the stigma attached to drinking by outsiders likely discouraged reporting intentions to save for it.
    JEL: D12 I12 O15
    Date: 2021–12

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