Give Me a Pass: Flexible Credit for Entrepreneurs in Colombia / Lasse Brune, Xavier Giné, Dean Karlan.

Format:

Book

Author/Creator:

Brune, Lasse.

Contributor:

National Bureau of Economic Research.

Giné, Xavier.

Karlan, Dean.

Series:

Working Paper Series (National Bureau of Economic Research) no. w30634.

NBER working paper series no. w30634

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2022.

Summary:

Microcredit promised business growth for small firms lacking access to banking loans. Although microcredit has reached millions, recent randomized evaluations find limited average business impacts. Critics often blame contract rigidity, specifically the fixed and frequent installments, for the lack of productive risk-taking. But, such rigidity may instill borrower discipline. We partnered with a Colombian lender that offered first-time borrowers a flexible loan that permitted delaying up to three monthly repayments. We find null effects for revenue and profits but increases in loan defaults. The evidence thus aligns with established microlender practice of offering rigid contracts to first-time borrowers.

Notes:

Print version record

November 2022.