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The Supply- and Demand-Side Impacts of Credit Market Information in Guatemala
Last registered on October 18, 2016

Pre-Trial

Trial Information
General Information
Title
The Supply- and Demand-Side Impacts of Credit Market Information in Guatemala
RCT ID
AEARCTR-0001364
Initial registration date
October 18, 2016
Last updated
October 18, 2016 3:43 PM EDT
Location(s)
Primary Investigator
Affiliation
IRPS/UCSD
Other Primary Investigator(s)
PI Affiliation
University of California, Berkeley
PI Affiliation
University of California, Berkeley
Additional Trial Information
Status
Completed
Start date
2003-06-01
End date
2005-12-31
Secondary IDs
Abstract
We utilize a unique pair of experiments to isolate the ways in which reductions in asymmetric information alter credit market outcomes. A Guatemalan microfinance lender gradually started using a credit bureau across its branches without letting borrowers know about it. One year later, we ran a large randomized credit information course that described the existence and workings of the bureau to the clients of this lender. This pairing of natural and randomized experiments allows us to separately identify how new information enters on the supply and the demand sides of the market. Our results indicate that the credit bureau generated large efficiency gains for the lender, and that these gains were augmented when borrowers understood the rules of the game. The credit bureau rewarded good borrowers but penalized weaker ones, increasing economic differentiation.
External Link(s)
Registration Citation
Citation
Janvry, Alain, Craig McIntosh and Elisabeth Sadoulet. 2016. "The Supply- and Demand-Side Impacts of Credit Market Information in Guatemala." AEA RCT Registry. October 18. https://doi.org/10.1257/rct.1364-1.0.
Former Citation
Janvry, Alain et al. 2016. "The Supply- and Demand-Side Impacts of Credit Market Information in Guatemala." AEA RCT Registry. October 18. http://www.socialscienceregistry.org/trials/1364/history/11308.
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Experimental Details
Interventions
Intervention(s)
Intervention Start Date
2004-06-01
Intervention End Date
2004-11-01
Primary Outcomes
Primary Outcomes (end points)
Impact of the credit bureau on screening borrowers in and out:

- Fraction leaving

- Fraction entering


Loan performance of checked and ejected borrowers:

- Internal performance prior to Crediref

- External performance on loans seen in bureau


Impact of screening on individual client composition.

- Impact on borrower characteristics


Impact of screening on the extensive margin: performance of new clients:

- Performance of first loan:

(Late fees > 1% of principal / Loan more than 2 months delinquent / Average loan size per borrower (US$))

- Future behavior:

(Probability of taking subsequent loan / Months until subsequent loan taken / Growth of subsequent loan per borrower)


Impact of screening on the intensive margin: performance of ongoing borrowers:

- Late fees > 1% of principal

- Loan more than 2 months delinquent

- Average loan size per borrower (US$)


Aggregate effect of use of the bureau for screening on credit agent performance:

- New clients per month

- Loans per months

- Loan performance


Impact of information on performance:

- Solidarity Group loans

(Delinquent payment / Amount of late fees (US$) / Late fees > 1% of principal / Loan more than 2 months delinquent)

- Communal Bank loans

(Delinquent payment / Amount of late fees (US$) / Late fees > 1% of principal / Loan more than 2 months delinquent)






















Primary Outcomes (explanation)
Secondary Outcomes
Secondary Outcomes (end points)
Secondary Outcomes (explanation)
Experimental Design
Experimental Design
The aim of this study was to analyze how lending outcomes have responded to the introduction of a credit bureau in Guatemala's microfinance market. In August 2001, a major microfinance lender began to install hardware permitting branches to communicate information with the bureau, but did not inform borrowers of the use of the bureau. A randomized training campaign was conducted in which 5000 borrowers were informed of the use of the system, how the bureau worked, and the opportunities and risks it presented for them. Institutional data from the lender and bureau was then used to track how a variety of lending outcomes emerged from this structure in which asymmetric information was reduced on the two sides of the market at two different points in time. It was thus possible to disentangle the supply- and demand-side impacts of credit market information, and identify separately the roles of adverse selection, moral hazard, and incentives on group composition.
Experimental Design Details
Randomization Method
Randomization was conducted in an office on a computer.
Randomization Unit
Levels of Randomization:

individual bank branches

individual borrowing groups (referred to as "solidarity groups")

individual loans
Was the treatment clustered?
Yes
Experiment Characteristics
Sample size: planned number of clusters
treatment and control data collected from 7 bank branches (other data collected from all 39 bank branches)

1040 borrowing groups



Sample size: planned number of observations
7 bank branches, 1040 borrowing groups
Sample size (or number of clusters) by treatment arms
573 borrowing groups treatment

467 borrowing groups control

Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
IRB Approval Date
IRB Approval Number
Post-Trial
Post Trial Information
Study Withdrawal
Intervention
Is the intervention completed?
Yes
Intervention Completion Date
November 01, 2004, 12:00 AM +00:00
Is data collection complete?
Yes
Data Collection Completion Date
December 31, 2005, 12:00 AM +00:00
Final Sample Size: Number of Clusters (Unit of Randomization)
Was attrition correlated with treatment status?
Final Sample Size: Total Number of Observations
1040 borrowing groups

approximately 5000 borrowers
Final Sample Size (or Number of Clusters) by Treatment Arms
573 borrowing groups treatment 467 borrowing groups control
Data Publication
Data Publication
Is public data available?
No
Program Files
Program Files
No
Reports, Papers & Other Materials
Relevant Paper(s)
Abstract
We utilize a unique pair of experiments to isolate the ways in which reductions in asymmetric information alter credit market outcomes. A Guatemalan microfinance lender gradually started using a credit bureau across its branches without letting borrowers know about it. One year later, we ran a large randomized credit information course that described the existence and workings of the bureau to the clients of this lender. This pairing of natural and randomized experiments allows us to separately identify how new information enters on the supply and the demand sides of the market. Our results indicate that the credit bureau generated large efficiency gains for the lender, and that these gains were augmented when borrowers understood the rules of the game. The credit bureau rewarded good borrowers but penalized weaker ones, increasing economic differentiation.
Citation
De Janvry, Alain, Craig McIntosh, and Elisabeth Sadoulet. 2010. "The Supply- and Demand-Side Impacts of Credit Market Information." Journal of Development Economics 93(2): 173-188.
REPORTS & OTHER MATERIALS