Productivity Shocks and Repayment Behavior in Rural Credit Markets : A Framed Field Experiment

Improving rural credit markets requires a good understanding of the root causes of market failures and taking necessary steps to address them. This paper investigates the role of productivity shocks in borrowers' repayment choices. Using a fra...

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Main Authors:	Adjognon, Guigonan Serge, Liverpool-Tasie, Lenis Saweda, Shupp, Robert
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2018
Subjects:	ACCESS TO FINANCE ACCESS TO CREDIT RURAL CREDIT MARKET MARKET FAILURE LENDING TO THE POOR PRODUCTIVITY ECONOMIC SHOCKS CASH CROP DEFAULT AGRICULTURAL PRODUCTION WEATHER IMPACTS CLIMATE IMPACT CLIMATE CHANGE
Online Access:	http://documents.worldbank.org/curated/en/126251531409559719/Productivity-shocks-and-repayment-behavior-in-rural-credit-markets-a-framed-field-experiment http://hdl.handle.net/10986/30001

id	okr-10986-30001
recordtype	oai_dc
spelling	okr-10986-300012021-06-08T14:42:46Z Productivity Shocks and Repayment Behavior in Rural Credit Markets : A Framed Field Experiment Adjognon, Guigonan Serge Liverpool-Tasie, Lenis Saweda Shupp, Robert ACCESS TO FINANCE ACCESS TO CREDIT RURAL CREDIT MARKET MARKET FAILURE LENDING TO THE POOR PRODUCTIVITY ECONOMIC SHOCKS CASH CROP DEFAULT AGRICULTURAL PRODUCTION WEATHER IMPACTS CLIMATE IMPACT CLIMATE CHANGE Improving rural credit markets requires a good understanding of the root causes of market failures and taking necessary steps to address them. This paper investigates the role of productivity shocks in borrowers' repayment choices. Using a framed field experiment that simulated a repeated interaction in an input credit market, the analysis finds strong evidence that negative productivity shocks lead to higher default, even when they do not induce negative returns. This relationship is robust to the presence of an information exchange system enforcing dynamic incentives. The findings suggest that recurrent agricultural production shocks resulting from the negative effects of climate change could exacerbate failures in rural credit markets, undermining hard-won progress toward rural financial inclusion. 2018-07-16T15:24:45Z 2018-07-16T15:24:45Z 2018-07 Working Paper http://documents.worldbank.org/curated/en/126251531409559719/Productivity-shocks-and-repayment-behavior-in-rural-credit-markets-a-framed-field-experiment http://hdl.handle.net/10986/30001 English Policy Research Working Paper;No. 8528 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
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	ACCESS TO FINANCE ACCESS TO CREDIT RURAL CREDIT MARKET MARKET FAILURE LENDING TO THE POOR PRODUCTIVITY ECONOMIC SHOCKS CASH CROP DEFAULT AGRICULTURAL PRODUCTION WEATHER IMPACTS CLIMATE IMPACT CLIMATE CHANGE
spellingShingle	ACCESS TO FINANCE ACCESS TO CREDIT RURAL CREDIT MARKET MARKET FAILURE LENDING TO THE POOR PRODUCTIVITY ECONOMIC SHOCKS CASH CROP DEFAULT AGRICULTURAL PRODUCTION WEATHER IMPACTS CLIMATE IMPACT CLIMATE CHANGE Adjognon, Guigonan Serge Liverpool-Tasie, Lenis Saweda Shupp, Robert Productivity Shocks and Repayment Behavior in Rural Credit Markets : A Framed Field Experiment
relation	Policy Research Working Paper;No. 8528
description	Improving rural credit markets requires a good understanding of the root causes of market failures and taking necessary steps to address them. This paper investigates the role of productivity shocks in borrowers' repayment choices. Using a framed field experiment that simulated a repeated interaction in an input credit market, the analysis finds strong evidence that negative productivity shocks lead to higher default, even when they do not induce negative returns. This relationship is robust to the presence of an information exchange system enforcing dynamic incentives. The findings suggest that recurrent agricultural production shocks resulting from the negative effects of climate change could exacerbate failures in rural credit markets, undermining hard-won progress toward rural financial inclusion.
format	Working Paper
author	Adjognon, Guigonan Serge Liverpool-Tasie, Lenis Saweda Shupp, Robert
author_facet	Adjognon, Guigonan Serge Liverpool-Tasie, Lenis Saweda Shupp, Robert
author_sort	Adjognon, Guigonan Serge
title	Productivity Shocks and Repayment Behavior in Rural Credit Markets : A Framed Field Experiment
title_short	Productivity Shocks and Repayment Behavior in Rural Credit Markets : A Framed Field Experiment
title_full	Productivity Shocks and Repayment Behavior in Rural Credit Markets : A Framed Field Experiment
title_fullStr	Productivity Shocks and Repayment Behavior in Rural Credit Markets : A Framed Field Experiment
title_full_unstemmed	Productivity Shocks and Repayment Behavior in Rural Credit Markets : A Framed Field Experiment
title_sort	productivity shocks and repayment behavior in rural credit markets : a framed field experiment
publisher	World Bank, Washington, DC
publishDate	2018
url	http://documents.worldbank.org/curated/en/126251531409559719/Productivity-shocks-and-repayment-behavior-in-rural-credit-markets-a-framed-field-experiment http://hdl.handle.net/10986/30001
_version_	1764471024581083136

Productivity Shocks and Repayment Behavior in Rural Credit Markets : A Framed Field Experiment

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