Signaling Creditworthiness in Peruvian Microfinance Markets: The Role of Information Sharing
AbstractUsing borrower-level data from FINCA, one of Peru's leading microfinance institutions (MFIs), this paper evaluates the effect on borrowers' access to credit of FINCA's decision to share information on individual outstanding debt records (positive information) as well as group default records (negative information). Since all borrowers were simultaneously exposed to the same policy, the paper develops a creative identification strategy that relies on the exogenous variation of the opening and closing dates of loan cycles across lending groups. A credit expansion effect is identified for some borrowers in FINCA who looked more creditworthy after their positive records were exposed, suggesting that other lenders targeted FINCA clients with good credit records. This credit expansion effect seems to have hurt FINCA through higher default rates as its better clients were skimmed off.
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Bibliographic InfoArticle provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.
Volume (Year): 12 (2012)
Issue (Month): 1 (October)
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Web page: http://www.degruyter.com
Other versions of this item:
- Verónica Frisancho, 2012. "Signaling Creditworthiness in Peruvian Microfinance Markets: The Role of Information Sharing," IDB Publications 77019, Inter-American Development Bank.
- Veronica Frisancho, 2012. "Signaling Creditworthiness in Peruvian Microfinance Markets: The Role of Information Sharing," Research Department Publications 4808, Inter-American Development Bank, Research Department.
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O16 - Economic Development, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
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- Verónica Balzarotti & Alejandra Anastasi, 2013. "Does Competition for Novice Borrowers Hurt Access to Finance? An Analysis in a Context of High Risk and Low Outreach," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(69), pages 101-149, December.
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