Selection into Credit Markets: Evidence from Agriculture in Mali

Lori Beaman (), Dean Karlan, Bram Thuysbaert and Christopher Udry

No 20387, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine whether returns to capital are higher for farmers who borrow than for those who do not, a direct implication of many credit market models. We measure the difference in returns through a two-stage loan and grant experiment. We find large positive investment responses and returns to grants for a random (representative) sample of farmers, showing that liquidity constraints bind. However, we find zero returns to grants for a sample of farmers who endogenously did not borrow. Thus we find important heterogeneity, even conditional on a wide range of observed characteristics, which has critical implications for theory and policy.

JEL-codes: D21 D92 O12 O16 Q12 Q14 (search for similar items in EconPapers)
Date: 2014-08
New Economics Papers: this item is included in nep-afr, nep-agr, nep-ban and nep-mfd
Note: DEV LE LS
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Citations: View citations in EconPapers (23)

Published as Lori Beaman & Dean Karlan & Bram Thuysbaert & Christopher Udry, 2023. "Selection Into Credit Markets: Evidence From Agriculture in Mali," Econometrica, Econometric Society, vol. 91(5), pages 1595-1627, September.

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