Microequity and Mutuality: Experimental Evidence on Credit with Performance-Contingent Repayment

Francesco Cordaro, Marcel Fafchamps, Colin Mayer, Muhammad Meki, Simon Quinn and Kate Roll

No 18818, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: A large food multinational wishes to help micro-distributors in its supply chain with the financing of a productive asset. Collaborating with the firm in Kenya, we conduct a field experiment to compare asset financing under a traditional debt contract to three alternatives that provide a greater sharing of risk and reward. We find the largest impacts from a novel hybrid contract that combines both debt- and equity-like features. The results suggest substantial mutual benefits for the multinational, its micro-distributors, and stock-points within its supply chain. These findings demonstrate the economic appeal of financing contracts that harness the improved observability of performance data in many low- and middle-income settings.

Keywords: Microfinance; Performance-contingent finance (search for similar items in EconPapers)
JEL-codes: G23 G32 O16 (search for similar items in EconPapers)
Date: 2024-02
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP18818 (application/pdf)

Related works:
Working Paper: Microequity and Mutuality_experimental evidence on credit with performance contingent repayment (2022)
Working Paper: Microequity and Mutuality: Experimental Evidence on Credit with Performance-Contingent Repayment (2022)
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:18818

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP18818

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 ().