| Title |
Asset-Based Microfinance for Microenterprises: Evidence from Pakistan |
| ID_Doc |
70229 |
| Authors |
Bari, F; Malik, K; Meki, M; Quinn, S |
| Title |
Asset-Based Microfinance for Microenterprises: Evidence from Pakistan |
| Year |
2024 |
| Published |
American Economic Review, 114, 2 |
| Abstract |
We run a field experiment offering graduated microcredit clients the opportunity to finance a business asset worth four times their usual borrowing limit. We implement this using a hire-purchase contract; our control group is offered a zero interest loan at the usual borrowing limit. We find large, significant, and persistent effects: treated microenterprise owners run larger businesses with higher profits; consequently, household consumption increases, particularly on food and children's education. A dynamic structural model with nonconvex capital adjustment costs rationalizes our results and allows counterfactual analysis; this highlights the potential for welfare improvements through large capital injections that are financially sustainable. |
| PDF |
https://ora.ox.ac.uk/objects/uuid:33441ba9-aec3-4c64-8c06-3116271f6dee/files/sbz60cw785
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