Working Paper: NBER ID: w17475
Authors: Dean Karlan; Jonathan Zinman
Abstract: Policymakers and microfinance institutions (MFIs) often claim to target poor entrepreneurs who then invest loan proceeds in their businesses. Typically in nonresearch settings these claims are assessed using readily available but unverified self-reports from client loan applications. Alternatively, independent surveyors could directly elicit how borrowers spent their loan proceeds. That too, however, could suffer from deliberate misreporting. We use data from the Peru and the Philippines in which independent surveyors elicited loan use both directly (i.e., by asking how individuals spent their loan proceeds) and indirectly (i.e., through a list-randomization technique that allows individuals to hide their answer from the surveyor). We find that direct elicitation under-reports the non-enterprise uses of loan proceeds.
Keywords: microfinance; list randomization; loan proceeds; sensitive behavior
JEL Codes: B4; D03; O12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| elicitation methods (C80) | reported loan use (G51) |
| direct questioning (C99) | underreporting of non-business uses of loan proceeds (H81) |
| list randomization (C90) | reported loan use for household items (G51) |
| direct questioning (C99) | reported loan use for household items (G51) |
| elicitation methods (C80) | underreporting for health-related and educational expenditures (I22) |