TY - BOOK ID - 133445208 TI - Identification strategy : a field experiment on dynamic incentives in rural credit markets AU - Goldberg, Jessica AU - Gine, Xavier AU - Yang, Dean PY - 2010 PB - Washington, D.C., The World Bank, DB - UniCat KW - Access to credit KW - Access to Finance KW - Bankruptcy and Resolution of Financial Distress KW - Borrower KW - Collateral KW - Credit market KW - Credit markets KW - Debt Markets KW - Defaulters KW - Economic Theory & Research KW - Finance and Financial Sector Development KW - Information asymmetries KW - International bank KW - Lender KW - Lenders KW - Loan KW - Loan sizes KW - Loan terms KW - Macroeconomics and Economic Growth KW - Microfinance KW - Moral hazard KW - Profitability KW - Public policy KW - Repayment KW - Repayment rates KW - Rural credit UR - https://www.unicat.be/uniCat?func=search&query=sysid:133445208 AB - How do borrowers respond to improvements in a lender's ability to punish defaulters? This paper reports the results of a randomized field experiment in rural Malawi that examines the impact of fingerprinting borrowers in a context where a unique identification system is absent. Fingerprinting allows the lender to more effectively use dynamic repayment incentives: withholding future loans from past defaulters while rewarding good borrowers with better loan terms. Consistent with a simple model of borrower heterogeneity and information asymmetries, fingerprinting led to substantially higher repayment rates for borrowers with the highest ex ante default risk, but had no effect for the rest of the borrowers. The change in repayment rates is driven by reductions in adverse selection (smaller loan sizes) and lower moral hazard (for example, less diversion of loan-financed fertilizer from its intended use on the cash crop). ER -