全球智库信息集成服务系统(G2TT): DP13329 Repayment Flexibility and Risk Taking: Experimental Evidence from Credit Contracts

G2TT

来源类型	Discussion paper
规范类型	论文
来源ID	DP13329
	DP13329 Repayment Flexibility and Risk Taking: Experimental Evidence from Credit Contracts
	Marianna Battaglia; Selim Gulesci; Andreas Madestam
发表日期	2022-05-27
出版年	2022
语种	英语
摘要	A widely held view is that small firms in developing countries are prevented from making profitable investments by lack of access to credit and insurance markets. One solution is to provide repayment flexibility in credit contracts. Repayment flexibility eases both the credit constraint, as it allows for a higher investment return, and offers insurance, in case of fluctuations in income. In a field experiment among traditional microfinance clients and larger collateralized borrowers in Bangladesh, we randomly assign the option to delay up to 2 monthly repayments at any point during a 12-month loan cycle. The flexible contract leads to substantial (0.2 standard deviation) improvements in the traditional microfinance clients’ business outcomes and socioeconomic status, combined with lower default rates. We show theoretically and empirically that these effects are driven by an increase in entrepreneurial risk taking, implying that the primary mechanism is insurance provision. Repayment flexibility also attracts less risk-averse borrowers interested in business expansion. At the same time, the effects for the larger loan are much more modest. Our findings suggest that lack of insurance is an important constraint for small firms but that a simple financial product that increases repayment flexibility can be an effective tool for enabling enterprise growth.
主题	Development Economics
关键词	Repayment flexibility Insurance Credit Microfinance entrepreneurship
URL	https://cepr.org/publications/dp13329-1
来源智库	Centre for Economic Policy Research (United Kingdom)
资源类型	智库出版物
条目标识符	http://119.78.100.153/handle/2XGU8XDN/546366
推荐引用方式 GB/T 7714	Marianna Battaglia,Selim Gulesci,Andreas Madestam. DP13329 Repayment Flexibility and Risk Taking: Experimental Evidence from Credit Contracts. 2022.