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Truth and consequences: Bogus pipeline experiment in informal small business lending

Ulf Römer, Oliver Musshoff (), Ron Weber and Calum Turvey ()

No 260765, Department of Agricultural and Rural Development (DARE) Discussion Papers from Georg-August-Universitaet Goettingen, Department of Agricultural Economics and Rural Development (DARE)

Abstract: The prevention of asymmetric information plays a major role in successful small business lending. The purpose of this research is to determine if small business applicants report their income information correctly when requesting a loan. Therefore, a randomized controlled trial bogus pipeline experiment was set up during a typical cash-flow analysis of a bank for small businesses in the Philippines. Results indicate that loan applicants of the treatment group reported a lower income, an effect which is most pronounced in the lowest income percentile. Moreover, our analyses reveal higher loan delinquencies in the control group.

Keywords: Agribusiness; Agricultural Finance; Financial Economics (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ent, nep-exp, nep-iue, nep-mfd and nep-sea
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:ags:gadadp:260765

DOI: 10.22004/ag.econ.260765

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