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on Microfinance |
| By: | Brune, Lasse; Gine, Xavier; Karlan, Dean |
| Abstract: | Although microcredit has reached millions, recent randomized evaluations find limited average business impacts. Contract rigidity, specifically the fixed and frequent installments, may limit productive risk-taking and thus diminish impact on average profits but risk triggering moral hazard. We test this with a Colombian lender that experimentally compared, for a sample of new borrowers, rigid lending to a loan product that included three “passes†to push off a monthly payment to the future. The flexible loan did lead to some shifts in investment behavior but no average impact on revenue or profits level or variance, and did lead to higher default. |
| Keywords: | Microenterprise; Microfinance; Microcredit; lending contracts; Repayment flexibility; flexible lending; Moral hazard |
| JEL: | C93 D22 G21 G22 L25 O12 O16 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21180 |
| By: | Karlan, Dean; Lambon-Quayefio, Monica; Manjeer, Utsav; Udry, Christopher |
| Abstract: | Digital finance in agriculture is a nascent technology which could help improve rural financial inclusion. In an experimental evaluation of a digital lending product for farmers in Southern Ghana, credit increases farm investments but has few statistically significant average effects on downstream outcomes. However, logistical challenges generated imperfect compliance with the treatment assignment, with some loans delivered in a timely fashion for agricultural investments and others coming later. We cautiously exploit this unplanned non-experimental implementation heterogeneity and conclude that agriculturally-focused digital credit platforms have potential to tackle persistent rural financial market imperfections, but the timing seems critical and deserves further study. |
| Keywords: | Ghana; Trade |
| JEL: | O12 O16 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21177 |
| By: | Burchardi, Konrad; Lerva, Benedetta; de Quidt, Jonathan; Tripodi, Stefano |
| Abstract: | Fertilizer adoption is persistently low among Sub-Saharan African farmers. Numerous governments have responded by introducing substantial price subsidies, but solving an allocation problem by introducing price distortions has unclear welfare implications. This paper presents results from a theory-guided experiment on fertilizer adoption among Ugandan farmers, finding that there exists a group of farmers with high returns to fertilizer, who would not adopt at the market price but can be induced to adopt with a 30% subsidy. Furthermore, consistent with adoption frictions due to liquidity constraints, the results indicate that a cash transfer is sufficient to eliminate the need for subsidies. These findings tie into broader ideas on second-best policymaking (Lipsey and Lancaster, 1956) and have important implications for fertilizer policy in Africa. |
| Keywords: | Technology adoption; Second-best policy; Subsidies; Selective trials; Development |
| Date: | 2026–01 |
| URL: | https://d.repec.org/n?u=RePEc:cpr:ceprdp:21023 |