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| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | Don’t Stay Put: Ride the (Credit) Wave |
| Organization Unit | |
| Authors |
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| Language |
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| Institution | University of London |
| Series Name | Centre for Banking Research Working Paper Series, Bayes Business School |
| Number | WP 02/22 |
| Date | 2022 |
| Abstract Text | Information asymmetries and enforcement problems often limit commercial lenders’ entry into low-income markets. Using detailed credit registry data with more than 32 million bank-borrower loan observations, we study the “failed” entry of commercial lenders into Bolivia’s microfinance market in the mid-1990s, which led to an over-indebtedness crisis. Tracing borrowers’ credit outcomes for nearly 10 years, we find that despite the commercial lenders’ poorly adapted lending technologies, stronger adverse selection, and moral hazard problems, the increase in competition carried significant short-term and long-term credit benefits to borrowers by forcing microfinance institutions to improve their loan terms and reduce rents. |
| Free access at | Official URL |
| Official URL | https://www.bayes.city.ac.uk/__data/assets/pdf_file/0008/700757/fu_et_al_2022.pdf |
| Other Identification Number | merlin-id:22870 |
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