Interest Rates and Consumer Credit in South Africa

Last registered on July 26, 2016


Trial Information

General Information

Interest Rates and Consumer Credit in South Africa
Initial registration date
July 26, 2016

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
July 26, 2016, 2:37 PM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.



Primary Investigator

Northwestern University

Other Primary Investigator(s)

PI Affiliation
Department of Economics, Dartmouth College

Additional Trial Information

Start date
End date
Secondary IDs
Policymakers often prescribe that microfinance institutions increase interest
rates to eliminate their reliance on subsidies. This strategy makes sense
if the poor are rate insensitive: then microlenders increase profitability (or
achieve sustainability) without reducing the poor’s access to credit. We test the
assumption of price inelastic demand using randomized trials conducted by a
consumer lender in South Africa. The demand curves are downward sloping,
and steeper for price increases relative to the lender’s standard rates. We also
find that loan size is far more responsive to changes in loan maturity than to
changes in interest rates, which is consistent with binding liquidity constraints.
External Link(s)

Registration Citation

Karlan, Dean and Jonathan Zinman. 2016. "Interest Rates and Consumer Credit in South Africa." AEA RCT Registry. July 26.
Former Citation
Karlan, Dean and Jonathan Zinman. 2016. "Interest Rates and Consumer Credit in South Africa." AEA RCT Registry. July 26.
Experimental Details


direct marketing of micro-loans in south africa
Intervention Start Date
Intervention End Date

Primary Outcomes

Primary Outcomes (end points)
takeup of credit
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Experiment tested the hypothesis of inelastic demand for microcredit, using a sample of predominantly-urban working-poor South Africans. Researchers worked with a large, for-profit micro-lending firm in South Africa.

The experiment was divided into two parts. The first part of the experiment evaluated how changes in loans' interest rate affected the demand for loans (price elasticity of demand). The second part of the experiment evaluated how changes in loans' times to maturity affected the demand for loans (maturity elasticity of demand).

Experimental Design Details
Randomization Method
Interest rate randomization:

The offer rate randomization was stratified by the client’s pre-approved risk category because
risk determined the loan price under standard operations. The standard schedule for four-month
loans was: low-risk = 7.75 percent per month; medium-risk = 9.75 percent; high-risk = 11.75 percent.

The randomization program established a target distribution of interest rates for fourmonth
loans in each risk category and then randomly assigned each individual to a rate based
on the target distribution for her category.

Maturity suggestion randomization:

A subset of borrowers in waves two and three received mailers containing a randomized maturity
suggestion as well. The suggestion took the form of a nonbinding “example” loan showing
one of the Lender’s most common maturities (four, six, or twelve months), where the length of
the maturity was randomly assigned.

Only low- and medium-risk borrowers were eligible to receive the suggestion randomization, since high-risk
borrowers could not obtain maturities greater than four months under the Lender’s standard operations.
Of low- and medium-risk clients (of whom 493 borrowed), 3,096 received a suggestion
(51 percent four-month, 25 percent six-month, 24 percent twelve-month).
Randomization Unit
No clusters
Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters
No clusters
Sample size: planned number of observations
58,168 potential clients
Sample size (or number of clusters) by treatment arms
see paper
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Institutional Review Boards (IRBs)

IRB Name
IRB Approval Date
IRB Approval Number


Post Trial Information

Study Withdrawal

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Is the intervention completed?
Intervention Completion Date
October 01, 2003, 12:00 +00:00
Data Collection Complete
Data Collection Completion Date
October 01, 2003, 12:00 +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
No clusters
Was attrition correlated with treatment status?
Final Sample Size: Total Number of Observations
53,810 potential clients
Final Sample Size (or Number of Clusters) by Treatment Arms
Data Publication

Data Publication

Is public data available?

Program Files

Program Files
Reports, Papers & Other Materials

Relevant Paper(s)

Reports & Other Materials