IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Creditworthiness as a signal of trustworthiness: field experiment in microfinance and consequences on causality in impact studies

  • Leonardo Becchetti

    ()

    (University of Rome Tor Vergata)

  • Pierluigi Conzo

    ()

    (University of Rome Tor Vergata)

Creditworthiness and trustworthiness are almost synonyms since the act of conferring a loan has the indirect effect of signaling the trustworthiness of the borrower. We test the creditworthiness-trustworthiness nexus in an investment game experiment on a sample of participants/non participants to a microfinance program in Argentina and find that trustors give significantly more to (and believe they will receive more from) microfinance borrowers. Trustees’ first and second order beliefs are also consistent with this picture. Our findings identify a “horizontal trustworthiness externality” which creates a direct (loan-performance) causality nexus since the mere loan provision increases the borrower’s attractiveness as a business partner.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://econometica.it/wp/wp17.pdf
Download Restriction: no

Paper provided by Econometica in its series Econometica Working Papers with number wp17.

as
in new window

Length: 63
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:ent:wpaper:wp17
Contact details of provider: Postal:
Università degli Studi di Milano-Bicocca, Edificio U9, Viale dell'Innovazione, 10, 20126 Milano

Phone: 0039 02 6448 6540
Web page: http://www.econometica.it
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Dean S. Karlan, 2005. "Social Connections and Group Banking," Working Papers 913, Economic Growth Center, Yale University.
  2. Hart, Oliver D & Moore, John, 1988. "Incomplete Contracts and Renegotiation," Econometrica, Econometric Society, vol. 56(4), pages 755-85, July.
  3. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
  4. Bellemare, C. & Kroger, S., 2004. "On Representative Social Capital," Discussion Paper 2004-57, Tilburg University, Center for Economic Research.
  5. Charness, Gary B & Brandts, Jordi, 1998. "Hot vs. Cold: Sequential Responses and Preference Stability in Experimental Games," University of California at Santa Barbara, Economics Working Paper Series qt4kx7d5pv, Department of Economics, UC Santa Barbara.
  6. Hong, Kesseley & Bohnet, Iris, 2004. "Status and Distrust: The Relevance of Inequality and Betrayal Aversion," Working Paper Series rwp04-041, Harvard University, John F. Kennedy School of Government.
  7. Blanco, Mariana & Engelmann, Dirk & Koch, Alexander K. & Normann, Hans-Theo, 2008. "Belief Elicitation in Experiments: Is there a Hedging Problem?," IZA Discussion Papers 3517, Institute for the Study of Labor (IZA).
  8. Timothy N. Cason & Vai-Lam Mui, 1998. "Social Influence in the Sequential Dictator Game," Monash Economics Working Papers archive-37, Monash University, Department of Economics.
  9. Rainer, Helmut & Siedler, Thomas, 2009. "Does democracy foster trust?," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 251-269, June.
  10. Charles Bellemare & Sabine Kröger & Arthur van Soest, 2008. "Measuring Inequity Aversion in a Heterogeneous Population Using Experimental Decisions and Subjective Probabilities," Econometrica, Econometric Society, vol. 76(4), pages 815-839, 07.
  11. Besley, T. & Coate, S., 1991. "Group Lending, Repayment Incentives And Social Collateral," Papers 152, Princeton, Woodrow Wilson School - Development Studies.
  12. Coleman, Brett E., 1999. "The impact of group lending in Northeast Thailand," Journal of Development Economics, Elsevier, vol. 60(1), pages 105-141, October.
  13. McCabe, Kevin A. & Rigdon, Mary L. & Smith, Vernon L., 2003. "Positive reciprocity and intentions in trust games," Journal of Economic Behavior & Organization, Elsevier, vol. 52(2), pages 267-275, October.
  14. -, 2003. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 28107, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  15. anonymous, 2003. "District economy on hold in first quarter," Western economic developments, Federal Reserve Bank of San Francisco, issue Mar, pages 2.
  16. -, 2003. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 28101, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  17. Sutter, Matthias & Kocher, Martin G., 2007. "Trust and trustworthiness across different age groups," Games and Economic Behavior, Elsevier, vol. 59(2), pages 364-382, May.
  18. -, 2003. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 28100, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  19. Dean S. Karlan, 2005. "Using Experimental Economics to Measure Social Capital And Predict Financial Decisions," Working Papers 909, Economic Growth Center, Yale University.
  20. Andreoni, James & Vesterlund, Lise, 2001. "Which is the Fair Sex? Gender Differences in Altruism," Staff General Research Papers 1951, Iowa State University, Department of Economics.
  21. Ernst Fehr & Urs Fischbacher & Bernhard von Rosenbladt & Jürgen Schupp & Gert G. Wagner, 2002. "A Nation-Wide Laboratory: Examining Trust and Trustworthiness by Integrating Behavioral Experiments into Representative Surveys," Discussion Papers of DIW Berlin 319, DIW Berlin, German Institute for Economic Research.
  22. Ake Lundvall & Bengt, 2003. "Why the new economy is a learning economy," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2003(117).
  23. Miguel Barrachina Ros, 2003. "Política de Fomento de la Economía Social," CIRIEC-España, revista de economía pública, social y cooperativa, CIRIEC-España, issue 47, pages 13-19, November.
  24. Timothy W. Guinnane, 2005. "Trust: A Concept Too Many," Working Papers 907, Economic Growth Center, Yale University.
  25. Bond, Philip & Rai, Ashok S., 2009. "Borrower runs," Journal of Development Economics, Elsevier, vol. 88(2), pages 185-191, March.
  26. -, 2003. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 28103, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  27. Anonymous, 2003. "Contents of Agricultural Economics, Vol. 29," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 29(3), December.
  28. Т. Ozernikova., 2003. "Labor Enforcement in the Transitional Economy," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 9.
  29. repec:dgr:kubcen:200457 is not listed on IDEAS
  30. Pitt, M.M. & Khandker, S.R., 1996. "Household and Intrahousehold Impact of the Grameen Bank and Similar Targeted Credit Programs in Bangladesh," World Bank - Discussion Papers 320, World Bank.
  31. -, 2003. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 28033, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  32. Leonardo Becchetti & Giacomo Degli Antoni & Marco Faillo, 2009. "Shedding Light into Preference Heterogeneity: Why Players of Traveller’s Dilemma Depart from Individual Rationality?," Econometica Working Papers wp09, Econometica.
  33. Dean Karlan, 2004. "Using experimental economics to measure social capital and predict financial decisions," Artefactual Field Experiments 00074, The Field Experiments Website.
  34. Solnick, Sara J, 2001. "Gender Differences in the Ultimatum Game," Economic Inquiry, Western Economic Association International, vol. 39(2), pages 189-200, April.
  35. Álvarez Alvarado, Marcos Tulio, 2003. "Ética y Economía," Observatorio de la Economía Latinoamericana, Grupo Eumed.net (Universidad de Málaga), issue 16, November.
  36. Anonymous, 2003. "MINNESOTA APPLIED ECONOMIST 708, Winter 2003," Minnesota Applied Economist/Minnesota Agricultural Economist 13213, University of Minnesota, Department of Applied Economics.
  37. Glaeser, Edward Ludwig & Laibson, David I. & Scheinkman, Jose A. & Soutter, Christine L., 2000. "Measuring Trust," Scholarly Articles 4481497, Harvard University Department of Economics.
  38. anonymous, 2003. "Economic recovery gains ground in the Southeast," EconSouth, Federal Reserve Bank of Atlanta, issue Q4.
  39. Eckel, Catherine C & Grossman, Philip J, 1998. "Are Women Less Selfish Than Men? Evidence from Dictator Experiments," Economic Journal, Royal Economic Society, vol. 108(448), pages 726-35, May.
  40. Steven Shavell, 2003. "Economic Analysis of Accident Law," NBER Working Papers 9483, National Bureau of Economic Research, Inc.
  41. Guinnane, T. & Banerjee, A. & Besley, T., 1993. "Thy Neighbor's Keeper: the Design of a Credit Cooperative with Theory and a Test," Papers 705, Yale - Economic Growth Center.
  42. -, 2003. "Global economic developments, 2001-2003," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 27560, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  43. Wydick, Bruce, 1999. "Can Social Cohesion Be Harnessed to Repair Market Failures? Evidence from Group Lending in Guatemala," Economic Journal, Royal Economic Society, vol. 109(457), pages 463-75, July.
  44. Wenbin Wei & Mark Hansen, 2003. "Cost Economics of Aircraft Size," Journal of Transport Economics and Policy, University of Bath, vol. 37(2), pages 279-296, May.
  45. Anonymous, 2003. "Minnesota Applied Economist 710, Fall 2003," Minnesota Applied Economist/Minnesota Agricultural Economist 13188, University of Minnesota, Department of Applied Economics.
  46. Bellemare, C. & Kroger, S., 2003. "On Representative Trust," Discussion Paper 2003-47, Tilburg University, Center for Economic Research.
  47. repec:dgr:kubcen:200347 is not listed on IDEAS
  48. Leonardo Becchetti & Giacomo degli Antoni, 2009. "The Sources of Happiness: Evidence from the Investment Game," Econometica Working Papers wp13, Econometica.
  49. -, 2003. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 28104, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  50. Anonymous, 2003. "Contents of Agricultural Economics, Vol. 28," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 28(3), May.
  51. Oxoby, Robert J. & McLeish, Kendra N., 2004. "Sequential decision and strategy vector methods in ultimatum bargaining: evidence on the strength of other-regarding behavior," Economics Letters, Elsevier, vol. 84(3), pages 399-405, September.
  52. Berg Joyce & Dickhaut John & McCabe Kevin, 1995. "Trust, Reciprocity, and Social History," Games and Economic Behavior, Elsevier, vol. 10(1), pages 122-142, July.
  53. -, 2003. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 28105, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  54. anonymous, 2003. "The global economy heats up," EconSouth, Federal Reserve Bank of Atlanta, issue Q4.
  55. anonymous, 2003. "Shaping the economy: innovation, productivity," Annual Report, Federal Reserve Bank of San Francisco, pages 8-13.
  56. Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
  57. Amitava Krishna Dutt & Jaime Ros, 2003. "Development economics and political economy," Chapters, in: Development Economics and Structuralist Macroeconomics, chapter 1 Edward Elgar Publishing.
  58. Nava Ashraf & Iris Bohnet & Nikita Piankov, 2006. "Decomposing trust and trustworthiness," Experimental Economics, Springer, vol. 9(3), pages 193-208, September.
  59. Nancy Buchan & Rachel Croson, 1999. "Gender and Culture: International Experimental Evidence from Trust Games," American Economic Review, American Economic Association, vol. 89(2), pages 386-391, May.
  60. anonymous, 2003. "Comparing economic forecasts," Financial Update, Federal Reserve Bank of Atlanta, issue Q 3.
  61. Jeannette Brosig & Joachim Weimann & Chun-Lei Yang, 2003. "The Hot Versus Cold Effect in a Simple Bargaining Experiment," Experimental Economics, Springer, vol. 6(1), pages 75-90, June.
  62. anonymous, 2003. "Economy on the upswing in the Twelfth District," Western economic developments, Federal Reserve Bank of San Francisco, issue Dec, pages 1-4.
  63. Alberto Alesina & Eliana La Ferrara, 2000. "The Determinants of Trust," NBER Working Papers 7621, National Bureau of Economic Research, Inc.
  64. -, 2003. "Evolución de la economía brasileña," Informe Estadístico – Oficina de la CEPAL en Brasilia 28106, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ent:wpaper:wp17. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Matteo Rizzolli)

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.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.

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

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.