Referrals: Peer Screening and Enforcement in a Consumer Credit Field Experiment

Gharad Bryan, Dean Karlan and Jonathan Zinman

American Economic Journal: Microeconomics, 2015, vol. 7, issue 3, 174-204

Abstract: Empirical evidence on peer intermediation lags behind both theory and practice in which lenders use peers to mitigate adverse selection and moral hazard. Using a referral incentive under individual liability, we develop a two-stage field experiment that permits separate identification of peer screening and enforcement. Our key contribution is to allow for borrower heterogeneity in both ex ante repayment type and ex post susceptibility to social pressure. Our method allows identification of selection on repayment likelihood, selection on susceptibility to social pressure, and loan enforcement. Implementing our method in South Africa we find no evidence of screening but large enforcement effects. (JEL D14, D82, G21, O12, O16)

JEL-codes: D14 D82 G21 O12 O16 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/mic.20130234
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Citations: View citations in EconPapers (12)

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Related works:
Working Paper: Referrals: peer screening and enforcement in a consumer credit field experiment (2015)
Working Paper: Referrals: Peer Screening and Enforcement in a Consumer Credit Field Experiment (2012)
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