Working Paper: CEPR ID: DP7754
Authors: Abhijit Banerjee; Esther Duflo
Abstract: This paper shows how the productive interplay of theory and experimental work has furthered our understanding of credit markets in developing countries. Descriptive facts motivated a body of theory, which in turned motivated experiments designed to test it. Results from these experiments reveal both the success and the limits of the theory, prompting new work to refine it. We argue that the literature on credit can be a template research in other domains.
Keywords: credit markets; field experiments
JEL Codes: C93; O16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| access to reasonably priced credit (G21) | borrowing in emergencies (G51) |
| high interest rates (E43) | borrowing behavior (G51) |
| high interest rates (E43) | increased defaults (G33) |
| higher interest rates (E43) | increased defaults (G33) |
| microcredit (O12) | lower default rates (E43) |
| microcredit (O12) | expand credit access (E51) |
| microfinance (G21) | improve household consumption patterns (D10) |
| microfinance (G21) | stimulate business creation (M13) |