IDEAS home Printed from https://ideas.repec.org/p/csa/wpaper/2022-08.html
   My bibliography  Save this paper

Microequity and Mutuality_experimental evidence on credit with performance contingent repayment

Author

Listed:
  • Francesco Cordaro
  • Marcel Fafchamps
  • Colin Mayer Author-Name: Muhammad Meki
  • Simon Quinn Author-Name: Kate Roll

Abstract

We conduct the first field experiment of a performance-contingent microfinance contract. A large food multinational wishes to help micro-distributors in its supply chain with the financing of a productive asset. Working with the firm in Kenya, we compare asset financing under a traditional debt contract to three alternatives: (i) a novel equity-like financing contract, (ii) a hybrid debt-equity contract, and (iii) an index-insurance financing contract. Experimental results reveal large positive impacts from the contractual innovations. These findings demonstrate the economic a ppeal of microfinance contracts that leverage improved observability of performance to achieve a greater sharing of risk and reward.

Suggested Citation

  • Francesco Cordaro & Marcel Fafchamps & Colin Mayer Author-Name: Muhammad Meki & Simon Quinn Author-Name: Kate Roll, 2022. "Microequity and Mutuality_experimental evidence on credit with performance contingent repayment," CSAE Working Paper Series 2022-08, Centre for the Study of African Economies, University of Oxford.
    • Handle: RePEc:csa:wpaper:2022-08
    as

    Download full text from publisher

    File URL: https://ora.ox.ac.uk/objects/uuid:fcd2343f-a0bc-435c-bd9d-13084f88725fFile-Format:Application/pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    Microfinance; Microequity; Supply-chain finance;
    All these keywords.

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G52 - Financial Economics - - Household Finance - - - Insurance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:csa:wpaper:2022-08. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Julia Coffey (email available below). General contact details of provider: https://edirc.repec.org/data/csaoxuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.