Large individual-liability line of credit for former group loan clients

Last registered on September 28, 2026
View Trial History

Pre-Trial

Trial Information

General Information

Title
Large individual-liability line of credit for former group loan clients
RCT ID
AEARCTR-0019018
Initial registration date
September 22, 2026

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
September 28, 2026, 8:57 AM EDT

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

Locations

There is information in this trial unavailable to the public. Use the button below to request access.

Request Information

Primary Investigator

Name
Shanthi Manian
Affiliation
World Bank, Washington State University
Contact Primary Investigator

Other Primary Investigator(s)

PI Name
Iacopo Bianchi
PI Affiliation
World Bank
Contact Investigator
PI Name
Tigist Ketema
PI Affiliation
World Bank
Contact Investigator
PI Name
Yemsrach Edey
PI Affiliation
World Bank
Contact Investigator

Additional Trial Information

Status
In development
Start date
2026-09-28
End date
2029-06-01
Keywords
Finance & Microfinance, 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 businesses in Sub-Saharan Africa, including in Ethiopia, tend to be less profitable and less likely to grow than male-owned businesses. Gender gaps in access to credit among small business owners in Ethiopia are well documented, and women primarily access credit via microfinance. Standard microfinance contracts typically require group liability and weekly or monthly repayment starting immediately. Business owners may find it difficult to undertake larger and riskier investments with positive expected profits when accessing loans due to these factors. Unfortunately, collateral requirements often prevent women from accessing larger, individual-liability loans. We evaluate an innovative product that aims to increase both access to credit and flexibility of loan terms among female micro and small business owners, without collateral. Meklit Microfinance, a microfinance institution in Ethiopia, has identified a sample of approximately 800 successful group loan clients who are strong candidates for individual liability loans using a novel credit scoring methodology. The impact evaluation will randomize these former group loan clients to two groups: (i) a control group that will continue to be offered standard group loans; and (ii) a treatment group to whom Meklit will offer a new individual-liability line of credit with a credit limit equivalent to the group loan. We will evaluate impacts on business survival, recipient borrower profits, household profits, and wellbeing. We will also evaluate take-up of the line of credit and compare repayment rates and bank return on investment to the standard group loan.
External Link(s)

Registration Citation

Citation
Bianchi, Iacopo et al. 2026. "Large individual-liability line of credit for former group loan clients." AEA RCT Registry. September 28. https://doi.org/10.1257/rct.19018-1.0
Sponsors & Partners
Experimental Details

Interventions

Intervention(s)
We evaluate an uncollateralized, individual-liability line of credit. In this model, borrowers are approved for credit in any amount up to a specific credit limit with a loan term of 24 months. In our impact evaluation, the credit limit will be 100,000 ETB. At any point over the course of the loan term, they may request a loan of any size, as long as the total credit outstanding does not exceed the credit limit. In other words, they may withdraw the entire loan amount up front as in a traditional loan, but they may also take out smaller amounts in tranches. Further, when they repay part of the principal, they may withdraw that principal again in the future, up to ten times. The minimum monthly payment is interest only, but the entire principal and interest must be repaid by the end of the 24-month term. Annual interest rates vary from 25% to 28% depending on sector, with interest charged only on the amount outstanding.
Intervention Start Date
2026-09-28
Intervention End Date
2028-12-31

Primary Outcomes

Primary Outcomes (end points)
• Total borrowing from all sources (Meklit + other formal + informal)
• Total value of credit accessed from Meklit
• Respondent's business survival
• Respondent’s business profits
• Total household business profits
• Business inventory
• Business investment in fixed assets/equipment
• On-time repayment rate
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
• Borrowing from other formal sources
• Borrowing from informal sources
• Business revenues
• Capital stock
• Number of businesses (diversification)
• Labor index: Owner and family hours worked in business, Employee hours worked
• Default (binary indicator)
• Total interest revenue received by Meklit
• Consumption index: Food insecurity (FIES), Household asset index, Non-food household expenditures (including clothing, health, education, celebrations, temptation goods such as alcohol and tobacco)
• Index of input into decision-making: Income respondent earns, Household income, Major business expenses, Major household expenses, childbearing, children’s education
• Control over loan use
• Index of sharing pressure: Self-reported pressure to share funds with spouse or relatives, Net transfers from respondent to/from household members, Loan given to a family member for non-business use
• Business practices index
• Index of risk-taking / investment in riskier but higher-return activities
• Loan use categories (inventory, equipment, debt repayment, household use, other business)
• Ability to respond to shocks / liquidity shortfalls
• Profit and sales volatility

Secondary Outcomes (explanation)
All indices are calculated as a standardized weighted index (Anderson 2008).

Experimental Design

Experimental Design
Sample:

We recruit eligible borrowers from existing group loan clients of Meklit Microfinance, a microfinance institution in Ethiopia. We draw from two pools of borrowers. The first pool was part of a credit scoring exercise based on their group loan performance, and achieved a credit score above a certain threshold. The second pool was selected by loan officers at Meklit Microfinance branches as promising borrowers eligible for an individual liability line of credit.

Randomization:

There are two groups in the study. The treatment group will be offered the line of credit product described in the Intervention section.

The control group will receive the standard group loan available to clients. In this model, loans in an amount of up to 100,000 ETB are given to individuals in groups consisting of 3-10 members. Loans are given to individuals (i.e. any individual may receive up to 100,000 ETB), but the group is liable for the payments of all members. All individuals in the control group may request a loan up to 100,000 ETB, but may also request a lower amount. The typical loan term is 24 months, similar to the line of credit product. The interest rate varies from X.
Experimental Design Details
Not available
Randomization Method
In office by computer
Randomization Unit
Microfinance group
Was the treatment clustered?
Yes

Experiment Characteristics

Sample size: planned number of clusters
Approximately 450
Sample size: planned number of observations
We will conduct a blocked randomization. Borrowers will be randomized in blocks of 100.
Sample size (or number of clusters) by treatment arms
Initial plan: T= 250, C = 650 borrowers. However, we may adjust the size of the treatment group if take-up of the product is lower than expected to achieve 250 disbursed loans.
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
Supporting Documents and Materials
IRB

Institutional Review Boards (IRBs)

IRB Name
HML IRB
IRB Approval Date
2025-08-18
IRB Approval Number
2640
Analysis Plan