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Giving Credit Where It Is Due

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  • Abhijit V. Banerjee
  • Esther Duflo

Abstract

In the last few years, field experiments have emerged as an attractive new tool in the effort to elaborate our understanding of economic issues relevant to poor countries and poor people. By enabling the researcher to precisely control the variation in the data, field experiments allow the estimation of parameters and testing of hypotheses that would be very difficult to implement with observational data. The results of this body of empirical work, in turn, have pushed theory in new directions. Much of this paper illustrates the power of this interplay between experimental and theoretical thinking. Rather than discussing this in the abstract, we focus on one area where the recent empirical work has been particularly exciting and useful -- credit. Credit markets in developing countries offer up many facts and puzzles that lead us to build theories based on informational constraints and psychological limitations. The empirical work inspired by these theories, in turn, has generated both support for the theories, which then influenced policy thinking, and new puzzles, which have prompted new efforts to improve the theory. We see the substantive, two-way conversation taking place between theory and data around credit markets in developing economies as a promising template for the field.

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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.24.3.61
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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 24 (2010)
Issue (Month): 3 (Summer)
Pages: 61-80

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Handle: RePEc:aea:jecper:v:24:y:2010:i:3:p:61-80

Note: DOI: 10.1257/jep.24.3.61
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References

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  1. Duflo, Esther & Hanna, Rema, 2005. "Monitoring Works: Getting Teachers to Come to School," CEPR Discussion Papers 5426, C.E.P.R. Discussion Papers.
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  5. Banerjee, Abhijit & Banerji, Rukmini & Duflo, Esther & Glennerster, Rachel & Khemani, Stuti, 2008. "Pitfalls of Participatory Programs: Evidence from a Randomized Evaluation in Education in India," CEPR Discussion Papers 6781, C.E.P.R. Discussion Papers.
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Citations

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Cited by:
  1. Martijn Boermans & Daan Willebrands, 2012. "Financial constraints, risk taking and firm performance: Recent evidence from microfinance clients in Tanzania," DNB Working Papers 358, Netherlands Central Bank, Research Department.
  2. Masagus M. Ridhwan & Henri L.F. de Groot & Piet Rietveld & Peter Nijkamp, 2012. "Regional Interest Rate Variations: Evidence from the Indonesian Credit Markets," Tinbergen Institute Discussion Papers 12-073/3, Tinbergen Institute.
  3. Becchetti, Leonardo, 2011. "Voting with the Wallet," AICCON Working Papers 94-2011, Associazione Italiana per la Cultura della Cooperazione e del Non Profit.
  4. Daniel Mueller, 2013. "A General Equilibrium Analysis of Inflation and Microfinance in Developing Countries," Working papers 2013/06, Faculty of Business and Economics - University of Basel.
  5. Raymond Fisman & Daniel Paravisini & Vikrant Vig, 2012. "Cultural Proximity and Loan Outcomes," Working Papers id:5036, eSocialSciences.
  6. Leonard, David K. & Bloom, Gerald & Hanson, Kara & O’Farrell, Juan & Spicer, Neil, 2013. "Institutional Solutions to the Asymmetric Information Problem in Health and Development Services for the Poor," World Development, Elsevier, vol. 48(C), pages 71-87.
  7. Francois Boutin-Dufresne & Santiago Peña & Oral Williams & Tomasz A. Zawisza, 2013. "Benchmarking Banking Sector Efficiency Across Regional Blocks in Sub-Saharan Africa: What Room for Policy?," IMF Working Papers 13/51, International Monetary Fund.
  8. Boonperm, Jirawan & Haughton, Jonathan & Khandker, Shahidur R. & Rukumnuaykit, Pungpond, 2012. "Appraising the Thailand village fund," Policy Research Working Paper Series 5998, The World Bank.
  9. Winkler, Adalbert & Wagner, Charlotte, 2013. "Growth patterns of microfinance clients - Evidence from Sub-Saharan Africa," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79945, Verein für Socialpolitik / German Economic Association.
  10. Hunt Allcott & Allan Collard-Wexler & Stephen D. O'Connell, 2014. "How Do Electricity Shortages Affect Productivity? Evidence from India," NBER Working Papers 19977, National Bureau of Economic Research, Inc.
  11. Masagus M. Ridhwan & Henri L.F. de Groot & Piet Rietveld & Peter Nijkamp, 2012. "Regional Interest Rate Variations: Evidence from the Indonesian Credit Markets," Tinbergen Institute Discussion Papers 12-073/3, Tinbergen Institute.
  12. Foellmi, Reto & Oechslin, Manuel, 2012. "Globalization and Productivity in the Developing World," Economics Working Paper Series 1203, University of St. Gallen, School of Economics and Political Science.
  13. Doan, Tinh & Gibson, John & Holmes, Mark, 2010. "What determines credit participation and credit constraints of the poor in peri-urban areas, Vietnam?," MPRA Paper 27509, University Library of Munich, Germany, revised 17 Dec 2010.
  14. Mark Dean & Anja Sautmann, 2014. "Credit Constraints and the Measurement of Time Preferences," Working Papers 2014-1, Brown University, Department of Economics.
  15. Binswanger, J. & Oechslin, M., 2014. "Disagreement and Learning About Reforms," Discussion Paper 2014-020, Tilburg University, Center for Economic Research.

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