Financing Smallholder Agriculture: An Experiment with Agent-Intermediated Microloans in India

Pushkar Maitra, Sandip Mitra (), Dilip Mookherjee, Alberto Motta () and Sujata Visaria ()
Additional contact information
Sandip Mitra: Sampling and Ocial Statistics Unit, Indian Statistical Institute
Alberto Motta: School of Economics, University of New South Wales
Sujata Visaria: Department of Economics, Hong Kong University of Science and Technology
Authors registered in the RePEc Author Service: Sujata Visaria and Sujata Visaria

No 2015-23, HKUST IEMS Working Paper Series from HKUST Institute for Emerging Market Studies

Abstract: Recent evaluations of traditional microloans have not found significant impacts on borrower production or incomes. We examine whether this can be remedied by delegating selection of borrowers for individual liability loans to local trader-lender agents incentivized by repayment-based commissions. In a field experiment in West Bengal this design (called TRAIL) was offered in randomly selected villages. In remaining villages five-member groups self-formed and applied for joint liability loans (called GBL) with otherwise similar terms. TRAIL loans increased production of potato (a leading cash crop) and farm incomes by 27-37%, whereas GBL loans had insignificant and highly dispersed effects. Both schemes achieved equally high repayment rates, while TRAIL loans had higher take-up rates and lower administrative costs. We argue the results can be partly explained by differences in selection patterns with respect to borrower risk and productivity characteristics.

Keywords: agricultural finance; agent based lending; group lending; selection; repayment (search for similar items in EconPapers)
JEL-codes: D82 O16 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2015-04, Revised 2015-04
New Economics Papers: this item is included in nep-agr, nep-cta, nep-dev, nep-exp and nep-mfd
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://iems.ust.hk/assets/publications/working-papers-2015/iemswp2015-23.pdf First version, 2015 (application/pdf)

Related works:
Journal Article: Financing smallholder agriculture: An experiment with agent-intermediated microloans in India (2017)
Working Paper: Financing Smallholder Agriculture: An Experiment wth Agent-Intermediated Microloans in India (2016)
Working Paper: Financing Smallholder Agriculture: An Experiment with Agent-Intermediated Microloans in India (2014)
Working Paper: Financing Smallholder Agriculture: An Experiment with Agent-Intermediated Microloans in India (2014)
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