Debt Traps? Market Vendors and Moneylender Debt in India and the Philippines

Dean Karlan, Sendhil Mullainathan and Benjamin N. Roth

No 12666, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: A debt trap occurs when someone takes on a high-interest rate loan and is barely able to pay back the interest, and thus perpetually finds themselves in debt (often by re-financing). Studying such practices is important for understanding financial decision-making of households in dire circumstances, and also for setting appropriate consumer protection policies. We conduct a simple experiment in three sites in which we paid off high-interest moneylender debt of individuals. Most borrowers returned to debt within six weeks. One to two years after intervention, treatment individuals were borrowing at the same rate as control households.

Keywords: Debt; Moneylender; Household finance (search for similar items in EconPapers)
JEL-codes: D12 D91 O12 (search for similar items in EconPapers)
Date: 2018-01
New Economics Papers: this item is included in nep-sea
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://cepr.org/publications/DP12666 (application/pdf)

Related works:
Journal Article: Debt Traps? Market Vendors and Moneylender Debt in India and the Philippines (2019)
Working Paper: Debt Traps? Market Vendors and Moneylender Debt in India and the Philippines (2018)
Working Paper: Debt Traps? Market Vendors and Moneylender Debt in India and the Philippines (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12666

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP12666

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().