Exogenous shocks, credit reports and access to credit: Evidence from colombian coffee producers

Nicolás de Roux

No 19769, Documentos CEDE from Universidad de los Andes, Facultad de Economía, CEDE

Abstract: Credit reporting systems have become a widespread tool to assess the creditworthiness of prospective borrowers. This paper studies the implications for credit access of using them in contexts where exogenous and transitory shocks affect income and repayment. Using a novel administrative data set with the near universe of formal loans to coffee producers in Colombia together with data from close to 1,200 rainfall stations, I show that transitory weather shocks lead to lower rates of loan repayment, lower credit scores, and more frequent denials of future loan applications. I present evidence that affected producers' incomes and ability to repay recover more quickly from shocks than credit access. This implies that these producers become credit constrained despite their ability to repay a loan. Insurance, contingency-dependent repayment schemes, or the inclusion of information on exogenous shocks in credit scoring models have the potential to alleviate the problem.

Keywords: Shocks; Credit Reports; Access to Credit (search for similar items in EconPapers)
JEL-codes: G21 O12 O13 Q12 Q14 Q54 (search for similar items in EconPapers)
Pages: 57
Date: 2021-11-19
New Economics Papers: this item is included in nep-agr, nep-ban, nep-dev, nep-env and nep-fdg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:col:000089:019769

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