The effects of information sharing on moral hazard in credit markets - Evidence from a randomized evaluation in the Philippines
Last registered on September 13, 2017

Pre-Trial

Trial Information
General Information
Title
The effects of information sharing on moral hazard in credit markets - Evidence from a randomized evaluation in the Philippines
RCT ID
AEARCTR-0002346
Initial registration date
July 24, 2017
Last updated
September 13, 2017 2:32 AM EDT
Location(s)

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Primary Investigator
Affiliation
LMU Munich
Other Primary Investigator(s)
PI Affiliation
LMU Munich
PI Affiliation
LMU Munich
Additional Trial Information
Status
On going
Start date
2016-03-09
End date
2018-12-31
Secondary IDs
Abstract
The increasing popularity of microfinance resulted in fierce competition in credit markets in many developing counties. Despite the favorable notion of competition in general, increased competition has led to new challenges. Recent studies find that higher levels of competition among microfinance institutions (MFIs) are related to over-indebtedness of borrowers and weakened loan repayment incentives. This might partly be driven by the absence of information sharing between lenders and the increase in competition which in turn results in greater information asymmetries in the markets. Information sharing via credit registries can thus be an important measure to improve the performance of microcredit markets and better access to credit for the poor. In this project we seek to answer the question how information sharing affects moral hazard in the credit market. We design and implement an information campaign regarding a private credit registry used by several microfinance institutions to increase knowledge on the existence of the credit registry among borrowers.
External Link(s)
Registration Citation
Citation
Czura, Kristina, Matthias Fahn and Lisa Spantig. 2017. "The effects of information sharing on moral hazard in credit markets - Evidence from a randomized evaluation in the Philippines." AEA RCT Registry. September 13. https://www.socialscienceregistry.org/trials/2346/history/21387
Experimental Details
Interventions
Intervention(s)
We design an information campaign to increase knowledge about a private credit registry that shares information on borrowers among microfinance institutions in the Philippines. The information campaign is conducted in lending centers of a partner microfinance institution that offers group loans in lending centers of 5 to 40 borrowers. The intervention is randomly assigned at the center level.
Intervention Start Date
2016-08-01
Intervention End Date
2016-08-31
Outcomes
Outcomes (end points)
Effort provision (in work/ household business), Repayment, Monitoring, Peer pressure, Usage of alternative credit sources, Investments
Outcomes (explanation)
The following variables will be constructed: effort, use of alternative credit sources, monitoring, and peer pressure.

For each variable, we have a set of questions from household surveys that adress different aspects.
In our analysis, we will use the individual questions as well as an index combining different questions to get a singular measure for 1) effort, 2) use of alternative credit sources, 3) monitoring, and 4) peer pressure.
For the index calculation, we use the ordinal alpha since we have 3-point Likert Scales (the commonly used Cronbach's Alpha is not applicable for Likert Scales with fewer than 5 points).
We also construct an index for competition as an explanatory variable.
Experimental Design
Experimental Design
We first elicit baseline values of variables of interest in a random subset of our study population via an individual survey. We then administer the above described intervention (i.e. information campaigns) in randomly selected centers. Shortly after the intervention, we re-survey the same individuals in the midline and approximately one year after the intervention, we administer the endline survey.
Experimental Design Details
Not available
Randomization Method
Randomization done in office by a computer
Randomization Unit
Borrowing centers consisting of 1-8 borrowing groups with 5 borrowers each
Was the treatment clustered?
Yes
Experiment Characteristics
Sample size: planned number of clusters
Number of borrowing centers included in study: 303
o Treatment 1: Standard campaign: 72
o Treatment 2: Detailed campaign: 75
o Treatment 3: Control campaign: 31
o Control: 125
Sample size: planned number of observations
We have two data sources: 1) Household phone survey with randomly selected clients from the participating centers. The planned number of borrowers being interviewed is 2000. Actual number of surveyed borrowers: in Baseline: 1941 in Midline: 1898 in Endline: currently ongoing 2) Administrative data on all clients in 303 participating centers from 2012 to 2017
Sample size (or number of clusters) by treatment arms
Treatment randomly assigned to borrowing centers with the following number of centers in each treatment
o Treatment 1: Standard campaign: 72
o Treatment 2: Detailed campaign: 75
o Treatment 3: Control campaign: 31
o Control: 125
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB
INSTITUTIONAL REVIEW BOARDS (IRBs)
IRB Name
Ethics Commission, Department of Economics, University of Munich
IRB Approval Date
2016-02-03
IRB Approval Number
Project 2016-05 „The Effect of a Credit Registry on Moral Hazard”