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on Microfinance |
| By: | Ambler, Kate; Bakhtiar, M. Mehrab; DeBrauw, Alan; Uddin, Mohammad Riad |
| Abstract: | Credit market failures may reflect voluntary withdrawal by risk-averse borrowers in addition to supply-side constraints. We conduct a randomized trial with 1, 517 Bangladeshi households, offering cattle financing through conventional loans or profit-sharing contracts that spread risk between the farmer and the financial partner. Overall, interest in and take-up of the profit-sharing contracts were modestly higher than the conventional loans. However, conventional loan take-up was much lower among risk-averse farmers, and profit-sharing eliminated the take-up gap between risk-averse and non-risk-averse farmers. We find that it is male risk preferences that are associated with these decisions even when contracts explicitly target women. Livestock investment increases under both contracts with no evidence of moral hazard under profit-sharing. |
| Keywords: | Agricultural Finance, Farm Management |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea26:404341 |
| By: | Pattnaik, Subhransu; Kramer, Berber; Ward, Patrick |
| Abstract: | Digital credit has emerged as a promising tool for addressing liquidity constraints among smallholder farmers, yet evidence on its longer-term effects on agricultural investment and production remains limited. This paper examines how access to digital agricultural credit shapes farmers’ investment decision and production outcomes over time using a two-phase cluster randomized intervention implemented in Odisha, India. We combine difference-in-differences, and staggered treatment estimators to assess how impacts evolve over years. We found limited evidence of immediate increases in aggregate agricultural input expenditure and durable asset accumulation. In contrast, we find robust evidence of positive effects on agricultural production among existing producers. Taken together, the findings indicate that digital credit primarily operates by relaxing liquidity constraints and improving the productivity of existing farming operations rather than inducing new entry into agriculture or triggering immediate capital deepening. The results highlight the importance of distinguishing between short-run and long-run responses to financial interventions and suggest that agricultural investment is dynamic nature and can take time to materialize. |
| Keywords: | Agricultural Finance, Farm Management |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea26:404346 |
| By: | Francis J. DiTraglia; Craig McIntosh; Isaac Meza; Joyce Sadka; Enrique Seira |
| Abstract: | Pawn loans offer borrowers a substantial degree of repayment flexibility in exchange for a harsh penalty in case of default: forfeit of collateral worth more than the loan amount along with any payments made toward recovery. Using a large RCT conducted in Mexico City, we document key stylized facts about pawn lending and explore the merits of replacing flexibility with structured repayment contracts in this important but understudied form of credit. Our experimental design includes a mandatory frequent-payments arm, a (status quo) flexible payments arm, and a choice between the two. This design point-identifies not only the average treatment effect, but also the effects of treatment on the treated and the untreated along with the average selection on gains, allowing a rigorous study of mandates versus choice. Although the average treatment effect of assigning borrowers to structured payments is a 19% decrease in their financial cost and a 17.5% decrease in the probability of default, only 11% of borrowers choose structured repayment contracts voluntarily. We show that structured repayment reduces financial costs for nearly all borrowers, including those who would not freely choose it, and find no evidence of selection on gains in cost savings. |
| Date: | 2026–08 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2608.13775 |