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Productivity Shocks and Repayment Behavior in Rural Credit Markets : A Framed Field Experiment / Adjognon, Guigonan Serge.
World Bank Open Knowledge Repository (formerly "World Bank E-Library Publications") Available online
View online- Format:
- Book
- Government document
- Author/Creator:
- Adjognon, Guigonan Serge.
- Series:
- Policy research working papers.
- World Bank e-Library.
- Language:
- English
- Subjects (All):
- Access to Credit.
- Access to Finance.
- Agriculture.
- Cash Crop.
- Climate Change.
- Commodities.
- Finance and Financial Sector Development.
- Macroeconomics and Economic Growth.
- Market Failure.
- Productivity.
- Rural Finance.
- Local Subjects:
- Access to Credit.
- Access to Finance.
- Agriculture.
- Cash Crop.
- Climate Change.
- Commodities.
- Finance and Financial Sector Development.
- Macroeconomics and Economic Growth.
- Market Failure.
- Productivity.
- Rural Finance.
- Physical Description:
- 1 online resource (47 pages)
- Other Title:
- Productivity Shocks and Repayment Behavior in Rural Credit Markets
- Place of Publication:
- Washington, D.C. : The World Bank, 2018.
- System Details:
- data file
- Summary:
- Improving rural credit markets requires a good understanding of the root causes of market failures and taking necessary steps to address them. This paper investigates the role of productivity shocks in borrowers' repayment choices. Using a framed field experiment that simulated a repeated interaction in an input credit market, the analysis finds strong evidence that negative productivity shocks lead to higher default, even when they do not induce negative returns. This relationship is robust to the presence of an information exchange system enforcing dynamic incentives. The findings suggest that recurrent agricultural production shocks resulting from the negative effects of climate change could exacerbate failures in rural credit markets, undermining hard-won progress toward rural financial inclusion.
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