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Fintech and Household Resilience to Shocks: Evidence from Digital Loans in Kenya

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  • Prashant Bharadwaj
  • William Jack
  • Tavneet Suri

Abstract

Developing country lenders are taking advantage of fintech tools to create fully digital loans on mobile phones. Using administrative and survey data, we study the take up and impacts of one of the most popular digital loan products in the world, M-Shwari in Kenya. While 34% of those eligible for a loan take it, the loan does not substitute for other credit. The loans improve household resilience: households are 6.3 percentage points less likely to forego expenses due to negative shocks. We conclude that while digital loans improve financial access and resilience, they are not a panacea for greater credit market failures.

Suggested Citation

  • Prashant Bharadwaj & William Jack & Tavneet Suri, 2019. "Fintech and Household Resilience to Shocks: Evidence from Digital Loans in Kenya," NBER Working Papers 25604, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25604
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    3. Burlando, Alfredo & Kuhn, Michael A. & Prina, Silvia, 2023. "Too Fast, Too Furious? Digital Credit Delivery Speed and Repayment Rates," IZA Discussion Papers 16451, Institute of Labor Economics (IZA).
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    9. Serge Ky & Clovis Rugemintwari & Alain Sauviat, 2019. "Is fintech good for bank performance? The case of mobile money in the East African Community," Working Papers hal-02155077, HAL.
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    11. Joël Cariolle & David A Carroll, 2022. "The Use of Digital for Public Service Provision in Sub-Saharan Africa," Working Papers hal-03004535, HAL.
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    17. M. Ali Choudhary & Anil K. Jain, 2022. "Credit access and relational contracts: An experiment testing informational and contractual frictions for Pakistani farmers," International Finance Discussion Papers 2022, Board of Governors of the Federal Reserve System (U.S.).
    18. Haseeb Ahmed & Benjamin W. Cowan, 2019. "Mobile Money and Healthcare Use: Evidence from East Africa," NBER Working Papers 25669, National Bureau of Economic Research, Inc.
    19. Fatkhurrohman, 2021. "Access to Fintech and Poverty : Evidence from the Arrival of 4G Networks in Indonesia," Warwick-Monash Economics Student Papers 24, Warwick Monash Economics Student Papers.
    20. Parlasca, Martin & Johnen, Constantin & Qaim, Matin, 2021. "Use of Mobile Financial Services Among Farmers in Africa: Insights from Kenya," 2021 Conference, August 17-31, 2021, Virtual 315863, International Association of Agricultural Economists.
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    22. Lyons, Angela C. & Kass-Hanna, Josephine & Fava, Ana, 2022. "Fintech development and savings, borrowing, and remittances: A comparative study of emerging economies," Emerging Markets Review, Elsevier, vol. 51(PA).

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    More about this item

    JEL classification:

    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

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