Behavioral Foundations of Microcredit: Experimental and Survey Evidence from Rural India
Michal BauerInstitute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Opletalova 26, Prague, 11000, Czech Republic, and CERGE-EI—joint workplace of the Center for Economic Research and Graduate Education, Charles University in Prague, and the Economics Institute of the Academy of Sciences of the Czech RepublicJulie ChytilováInstitute of Economic Studies, Faculty of Social Sciences, Charles University in Prague, Opletalova 26, Prague, 11000, Czech RepublicJonathan MorduchWagner Graduate School of Public Service, New York University, The Puck Building, 295 Lafayette Street, New York, NY 10012
2012en
ABI
Annotatsiya
We use experimental measures of time discounting and risk aversion for villagers in south India to highlight behavioral features of microcredit, a financial tool designed to reduce poverty and fix credit market imperfections. The evidence suggests that microcredit contracts may do more than reduce moral hazard and adverse selection by imposing new forms of discipline on borrowers. We find that, conditional on borrowing from any source, women with present-biased preferences are more likely than others to borrow through microcredit institutions. Another particular contribution of microcredit may thus be to provide helpful structure for borrowers seeking self-discipline. JEL: G21, I38, O15, O16, O18
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