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Self-Selection into Credit Markets: Evidence from Agriculture in Mali

Lori Beaman (), Dean Karlan (), Bram Thuysbaert () and Christopher Udry ()
Additional contact information
Bram Thuysbaert: Ghent University

Working Papers from Economic Growth Center, Yale University

Abstract: We partnered with a micro-lender in Mali to randomize credit offers at the village level. Then, in no-loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with respect to agricultural investment. In loan-villages, we gave grants to a random subset of farmers who (endogenously) did not borrow. These farmers have lower – in fact zero – marginal returns to the grants. Thus we find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self-select into lending programs.

Keywords: credit markets; agriculture; returns to capital (search for similar items in EconPapers)
JEL-codes: D21 D92 O12 O16 Q12 Q14 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2014-05
New Economics Papers: this item is included in nep-agr, nep-dev and nep-mfd
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Working Paper: Self-Selection into Credit Markets: Evidence from Agriculture in Mali (2014) Downloads
Working Paper: Self-Selection into Credit Markets: Evidence from Agriculture in Mali (2014) Downloads
Working Paper: Self-Selection into Credit Markets: Evidence from Agriculture in Mali (2014) Downloads
Working Paper: Self-Selection into Credit Markets: Evidence from Agriculture in Mali (2014) Downloads
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