Are Psychometric Tools a Viable Screening Method for Small and Medium-Size Enterprise Lending? Evidence from Peru

This study collaborated with the Entrepreneurial Finance Lab and a large bank in Peru to use psychometrics for small and medium-size enterprise lending. Applicants used a psychometric tool and those who achieved a score higher than a threshold were...

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Main Authors:	Arraiz, Irani, Bruhn, Miriam, Ruiz Ortega, Claudia, Stucchi, Rodolfo
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2017
Subjects:	ASYMMETRIC INFORMATION PSYCHOMETRICS CREDIT RISK ACCESS TO FINANCE SMALL AND MEDIUM ENTERPRISES SMEs MICROFINANCE
Online Access:	http://documents.worldbank.org/curated/en/729911513262009360/Are-psychometric-tools-a-viable-screening-method-for-small-and-medium-size-enterprise-lending-evidence-from-Peru http://hdl.handle.net/10986/29012

id	okr-10986-29012
recordtype	oai_dc
spelling	okr-10986-290122021-06-14T10:10:16Z Are Psychometric Tools a Viable Screening Method for Small and Medium-Size Enterprise Lending? Evidence from Peru Arraiz, Irani Bruhn, Miriam Ruiz Ortega, Claudia Stucchi, Rodolfo ASYMMETRIC INFORMATION PSYCHOMETRICS CREDIT RISK ACCESS TO FINANCE SMALL AND MEDIUM ENTERPRISES SMEs MICROFINANCE This study collaborated with the Entrepreneurial Finance Lab and a large bank in Peru to use psychometrics for small and medium-size enterprise lending. Applicants used a psychometric tool and those who achieved a score higher than a threshold were offered a loan. Using a regression discontinuity design and credit bureau data, the study finds that the tool increased small and medium-size enterprise loan use by up to 59 percentage points for applicants without a credit history, without leading to worse repayment behavior. This increase in borrowing resulted primarily from financial institutions other than the partner bank. For applicants with a credit history, the tool did not increase small and medium-size enterprise loan use. 2017-12-15T18:43:40Z 2017-12-15T18:43:40Z 2017-12 Working Paper http://documents.worldbank.org/curated/en/729911513262009360/Are-psychometric-tools-a-viable-screening-method-for-small-and-medium-size-enterprise-lending-evidence-from-Peru http://hdl.handle.net/10986/29012 English Policy Research Working Paper;No. 8276 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Latin America & Caribbean Peru
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ASYMMETRIC INFORMATION PSYCHOMETRICS CREDIT RISK ACCESS TO FINANCE SMALL AND MEDIUM ENTERPRISES SMEs MICROFINANCE
spellingShingle	ASYMMETRIC INFORMATION PSYCHOMETRICS CREDIT RISK ACCESS TO FINANCE SMALL AND MEDIUM ENTERPRISES SMEs MICROFINANCE Arraiz, Irani Bruhn, Miriam Ruiz Ortega, Claudia Stucchi, Rodolfo Are Psychometric Tools a Viable Screening Method for Small and Medium-Size Enterprise Lending? Evidence from Peru
geographic_facet	Latin America & Caribbean Peru
relation	Policy Research Working Paper;No. 8276
description	This study collaborated with the Entrepreneurial Finance Lab and a large bank in Peru to use psychometrics for small and medium-size enterprise lending. Applicants used a psychometric tool and those who achieved a score higher than a threshold were offered a loan. Using a regression discontinuity design and credit bureau data, the study finds that the tool increased small and medium-size enterprise loan use by up to 59 percentage points for applicants without a credit history, without leading to worse repayment behavior. This increase in borrowing resulted primarily from financial institutions other than the partner bank. For applicants with a credit history, the tool did not increase small and medium-size enterprise loan use.
format	Working Paper
author	Arraiz, Irani Bruhn, Miriam Ruiz Ortega, Claudia Stucchi, Rodolfo
author_facet	Arraiz, Irani Bruhn, Miriam Ruiz Ortega, Claudia Stucchi, Rodolfo
author_sort	Arraiz, Irani
title	Are Psychometric Tools a Viable Screening Method for Small and Medium-Size Enterprise Lending? Evidence from Peru
title_short	Are Psychometric Tools a Viable Screening Method for Small and Medium-Size Enterprise Lending? Evidence from Peru
title_full	Are Psychometric Tools a Viable Screening Method for Small and Medium-Size Enterprise Lending? Evidence from Peru
title_fullStr	Are Psychometric Tools a Viable Screening Method for Small and Medium-Size Enterprise Lending? Evidence from Peru
title_full_unstemmed	Are Psychometric Tools a Viable Screening Method for Small and Medium-Size Enterprise Lending? Evidence from Peru
title_sort	are psychometric tools a viable screening method for small and medium-size enterprise lending? evidence from peru
publisher	World Bank, Washington, DC
publishDate	2017
url	http://documents.worldbank.org/curated/en/729911513262009360/Are-psychometric-tools-a-viable-screening-method-for-small-and-medium-size-enterprise-lending-evidence-from-Peru http://hdl.handle.net/10986/29012
_version_	1764468266811523072

Are Psychometric Tools a Viable Screening Method for Small and Medium-Size Enterprise Lending? Evidence from Peru

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