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Impact of Conditional Cash Transfers and Remittances on Credit Market Outcomes in Rural Nicaragua


  • Hernandez, Emilio
  • Sam, Abdoul G.
  • Gonzalez-Vega, Claudio
  • Chen, Joyce J.


The impact of public and private transfers on credit markets has not been sufficiently studied and understanding any spill over effects caused by these transfers may be useful for policy makers. This paper estimates the impact of Conditional Cash Transfers (CCTs) and remittances received by poor households in rural Nicaragua on their decision to request a loan. We find that, on average, CCTs did not affect the request of credit while remittances increased it, controlling for potential endogeneity. We argue the reduction in income risk provided by remittances changes borrowers’ expected marginal returns to a loan and/or their creditworthiness, as perceived by lenders. The successful enforcement of the use of CCTs on long-term investments seems to have avoided externalities on the use of short-term credit these households have access to and their creditworthiness.

Suggested Citation

  • Hernandez, Emilio & Sam, Abdoul G. & Gonzalez-Vega, Claudio & Chen, Joyce J., 2009. "Impact of Conditional Cash Transfers and Remittances on Credit Market Outcomes in Rural Nicaragua," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49319, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea09:49319

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    References listed on IDEAS

    1. Farzin, Y H & Kort, P M, 2000. " Pollution Abatement Investment When Environmental Regulation Is Uncertain," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 2(2), pages 183-212.
    2. Richard Hartl & Peter Kort, 1996. "Capital accumulation of a firm facing an emissions tax," Journal of Economics, Springer, vol. 63(1), pages 1-23, February.
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    Cited by:

    1. Wagner, Charlotte & Winkler, Adalbert, 2013. "The Vulnerability of Microfinance to Financial Turmoil – Evidence from the Global Financial Crisis," World Development, Elsevier, vol. 51(C), pages 71-90.
    2. Stella Luz A. Quimbo & Joseph J. Capuno & Aleli D. Kraft & Rhea Molato & Carlos Tan, Jr., 2015. "Where does the money go? Assessing the expenditure and income effects of the Philippines' Conditional Cash Transfer Program," UP School of Economics Discussion Papers 201502, University of the Philippines School of Economics.
    3. Charity Moore, 2009. "Nicaragua?s Red de Protección Social: An Exemplary but Short-Lived Conditional Cash Transfer Programme," Country Study 17, International Policy Centre for Inclusive Growth.

    More about this item


    International Development; D14; F22; O15;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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