Small business demand for loans in Ethiopia

Last registered on April 25, 2024
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Pre-Trial

Trial Information

General Information

Title
Small business demand for loans in Ethiopia
RCT ID
AEARCTR-0013311
Initial registration date
April 17, 2024

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
April 25, 2024, 11:49 AM EDT

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

Locations

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Primary Investigator

Name
Shanthi Manian
Affiliation
Washington State University
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Other Primary Investigator(s)

PI Name
Ketki Sheth
PI Affiliation
University of Tennessee
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Additional Trial Information

Status
On going
Start date
2024-04-03
End date
2024-06-01
Keywords
Firms & Productivity, Gender
Additional Keywords
JEL code(s)
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
Female-owned firms in Sub-Saharan Africa have lower profits and less access to capital. A common approach to promoting capital access for female business owners is to reserve loans or other capital for women. However, loan application processes remain a barrier to access. Using an information experiment with female small business owners in Addis Ababa, Ethiopia, we study whether limiting loans to female business owners increases women's willingness to apply for those loans. This is a follow-up study to "Gender, Competition, and Requests for Capital: Experimental Evidence on Female Prioritization" (AEARCTR-0011271).
External Link(s)

Registration Citation

Citation
Manian, Shanthi and Ketki Sheth. 2024. "Small business demand for loans in Ethiopia." AEA RCT Registry. April 25. https://doi.org/10.1257/rct.13311-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
All business owners in the sample are informed about a loan product. We randomize whether business owners are told that the loan product is reserved for women, and estimate whether this affects women business owner’s interest in the next steps for obtaining the loan.
Intervention Start Date
2024-04-03
Intervention End Date
2024-05-15

Primary Outcomes

Primary Outcomes (end points)
Participation: Whether the business was interested in the loan, measured by their willingness to complete an interest form.
Quality Margin: Business quality, measured by reported business profits of those who completed the interest form.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Participation:
- Registering interest through SMS
- Completing the first step in the loan application process, measured by beginning the process of obtaining the required ID card for the loan program.
Quality Margin:
- Household monthly profit
- Indicator for having either had a default or late payment for a loan
- Indicator of having collateral or a guarantor for a loan
Mechanism Outcomes
- Perceived probability of acceptance
- Perceived loan acceptance rate
- Expected loan interest rate for applicants
- Expected loan amount for applicants
- Expected loan duration for applicants
Heterogeneity Mechanisms:
- Relative success of business differs when compared only to female gender: Rank among women relative to overall rank.
- Willingness to compete: index of three measures of competitive preferences
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
We recruit female small business owners by going door-to-door in markets in Addis Ababa. Participants are informed about a loan program administered by EDI that provides faster processing of loans. A randomly selected subset of the sample is informed that these loans are reserved for women and the program is intended to promote female entrepreneurship. Participants are then asked if they are interested in the program and would like to complete an application form.
Experimental Design Details
Not available
Randomization Method
random number generator in SurveyCTO
Randomization Unit
individual
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
N/A
Sample size: planned number of observations
1500 to 2500. The exact number of observations is dependent on how many businesses approached meet our eligibility requirement of being female-owned with a business license.
Sample size (or number of clusters) by treatment arms
50% of businesses will be assigned to treatment (i.e., 750 to 1250 businesses per treatment arm).
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
UC Merced
IRB Approval Date
2024-03-06
IRB Approval Number
UCM2019-87
Analysis Plan

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