Self-Selection into Credit Markets: Evidence from Agriculture in Mali - Working Paper 377

Lori Beaman
Authors registered in the RePEc Author Service: Christopher Udry, Lori Beaman () and Dean Karlan

No 377, Working Papers from Center for Global Development

Abstract: We partnered with a micro-lender in Mali to randomize credit offers at the village level. Then, in no-loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with respect to agricultural investment. In loan-villages, we gave grants to a random subset of farmers who (endogenously) did not borrow. These farmers have lower – in fact zero – marginal returns to the grants. Thus we find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self-select into lending programs.

Keywords: credit markets; agriculture; returns to capital (search for similar items in EconPapers)
JEL-codes: D21 D92 O12 O16 Q12 Q14 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2014-09
New Economics Papers: this item is included in nep-agr, nep-ban, nep-dev and nep-mfd
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:cgd:wpaper:377

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