Mitigating asymmetric information in credit markets: Evidence from Microcredit

Miguel Sarmiento-Paipilla, Andrés Esteban Casas-Fajardo, John Sebastian Tobar-Cruz and Eduardo Yanquen

Borradores de Economia from Banco de la Republica de Colombia

Abstract: This paper analyzes the impact of microcredit on the transition to credit lines in the rural sector. Using administrative data, we find that borrowers entering the subsidized credit market through microcredit programs transition to credit lines with higher loan volumes, lower interest rates, and longer maturities relative to borrowers who enter this market directly. Our results suggest that by reducing asymmetries of information —through both credit history and asset accumulation— microcredit expansion via public policy promotes the transition of new borrowers to credit markets dominated by large borrowers. *****RESUMEN: Este documento analiza el impacto del microcrédito en la transición hacia líneas de crédito en el sector rural. Utilizando datos administrativos, encontramos que los prestatarios que ingresan al mercado de crédito subsidiado a través de programas de microcrédito transitan hacia líneas de crédito con mayores montos, menores tasas de interés y plazos más largos en comparación con aquellos que acceden directamente a este mercado. Nuestros resultados sugieren que, al reducir las asimetrías de información —tanto mediante la construcción de historial crediticio como a través de la acumulación de activos—, la expansión del microcrédito impulsada por políticas públicas facilita la transición de nuevos prestatarios hacia mercados de crédito dominados por grandes actores.

Keywords: Asymmetric information; microfinance; financial inclusion; rural credit; Información asimétrica; microfinanzas; inclusión financiera; crédito rural (search for similar items in EconPapers)
JEL-codes: G21 O12 O54 (search for similar items in EconPapers)
Pages: 36
Date: 2025-11
New Economics Papers: this item is included in nep-fle and nep-mfd
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.32468/be.1328

Related works:
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:bdr:borrec:1328

Access Statistics for this paper

More papers in Borradores de Economia from Banco de la Republica de Colombia Cra 7 # 14-78. Contact information at EDIRC.
Bibliographic data for series maintained by Clorith Angélica Bahos Olivera ().