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Interest Rates and Informational Issues in the Credit Market: Experimental Evidence from Brazil

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  • de Lucinda, Claudio Ribeiro
  • Vieira, Rodrigo Luiz

Abstract

This paper utilizes Brazilian data to investigate interest-rate sensitivity and informational issues associated with the credit demand of the middle-income class in a large emerging economy. This study’s data were collected from an experiment in which credit offers with randomized interest rates were sent to recipients. The results indicate that credit constraints and informational issues are important for both the lower middle-class and higher middle-class income groups. Interest rate reductions may be more effective for higher income groups.

Suggested Citation

  • de Lucinda, Claudio Ribeiro & Vieira, Rodrigo Luiz, 2014. "Interest Rates and Informational Issues in the Credit Market: Experimental Evidence from Brazil," World Development, Elsevier, vol. 59(C), pages 47-58.
  • Handle: RePEc:eee:wdevel:v:59:y:2014:i:c:p:47-58
    DOI: 10.1016/j.worlddev.2014.01.027
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    References listed on IDEAS

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    Keywords

    credit demand; adverse selection; moral hazard;

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