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Lori Beaman (Northwestern) – "Selection into Credit Markets: Evidence from Agriculture in Mali "

June 30, 2021 @ 3:00 pm - 4:15 pm

Microeconomics Seminar : 
Time: 3:00pm – 4:15pm
Date:  30th June 2021

Lori Beaman (Northwestern)  – “Selection into Credit Markets: Evidence from Agriculture in Mali”

Abstract: We use a two-stage experiment on agricultural lending in Mali to test whether selection into lending is predictive of heterogeneous returns to capital. Understanding this heterogeneity, and the selection process which reveals it, is critical for guiding modelling of credit markets in developing countries, as well as for policy. We find such heterogeneity: returns to capital are higher for farmers who borrow than for those who do not. In our first stage, we offer loans in some villages and not others. In the second stage, we provide cash grants to a random subset of all farmers in villages where no loans were offered, and to a random subset of the farmers who do not borrow in villages where loans were offered. We estimate seasonal returns to the grant of 130% for borrowers, whereas we find returns near zero for the sample representative of those who had recently not borrowed. We also provide evidence that there are some farmers – particularly those that are poor at baseline – that have high returns but do not receive a loan. Joint with Dean Karlan, Bram Thuysbaert and Chris Udry.

Roxana Fernandez Machado (CREST), Julien Combe (CREST), and Matias Nunez (CREST)