Impacts of Asset Collateralized Loans

Last registered on August 09, 2018


Trial Information

General Information

Impacts of Asset Collateralized Loans
Initial registration date
August 06, 2018

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
August 09, 2018, 1:21 AM EDT

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


Primary Investigator

MIT Sloan School

Other Primary Investigator(s)

PI Affiliation
Utrecht University
PI Affiliation
Georgetown University
PI Affiliation
Harvard University

Additional Trial Information

Start date
End date
Secondary IDs
We examine the impact of replacing loans with high down payments and stringent guarantor requirements with asset-collateralized loans, similar to the mortgages and car loans that are common in developed countries. In particular, we studied a Kenyan dairy's saving and credit cooperative which randomly offered different borrowing conditions to different members for a loan for a particular asset: a 5000 liter water tank. The cooperative's standard borrowing conditions required that one third of loans be secured with deposits by the borrower, and that the remaining two thirds be secured with cash or shares from guarantors. In this study, we compare this loan contract to less stringent loan contracts to study how these requirements affect take up and loan repayments. We also conduct a number of different surveys to study the impacts of the water tanks themselves.
External Link(s)

Registration Citation

Jack, William et al. 2018. "Impacts of Asset Collateralized Loans." AEA RCT Registry. August 09.
Former Citation
Jack, William et al. 2018. "Impacts of Asset Collateralized Loans." AEA RCT Registry. August 09.
Experimental Details


The intervention is a credit intervention, in collaboration with a savings and credit cooperative (SACCO). The main intervention covered 1804 farmers who were offered a loan for a 5000 liter plastic water tank worth 24,000 Kenyan shillings (approximately $320). The loans were rolled out between March and October 2010.

The loan capital could only be used to purchase the water tank. Once the loan contracts with the SACCO was signed, the SACCO delivered the tanks to the farmer's house. The loans were to be paid over 24 months, with a month principal payment of KShs 1,000 due a month. The interest charged by the SACCO was 1% on a declining balance.

A second phase of loans was rolled out between February and April 2012, covering 2600 farmers. This was conducted as an out of sample test of the loan contracts.
Intervention Start Date
Intervention End Date

Primary Outcomes

Primary Outcomes (end points)
Measures of loan default (late payments, early payments, pending default letters, default); measure of productivity of the water tanks (milk sales, milk production), assets (especially ownership of water tanks), time use (by age and gender), child education outcomes
Primary Outcomes (explanation)
We conducted a number of different surveys:

- A first baseline survey was administered to 2046 households regularly selling milk to the dairy out of which 1804 farmers were administered the loans. This was collected in two rounds (one in June through November 2009 and the second in February-July 2010). The baseline survey collected data on demographics, production of milk, agricultural production, household assets, credit, income and consumption. The baseline sample was of 2046 farmers. For these farmers, we then conducted a screening test to determine if the farmers were still delivering milk to the Nyala Cooperative. The post-screening sample of 1804 farmers were then randomly assigned to one of four treatment groups as above.

- A second baseline (as an update) was administered to 917 farmers from the first phase of the first baseline (due to a delay in implementation) in March-June 2010.

- The first follow up was conducted on a sample of 901 households that covered just two treatments groups (Groups A and C described below) in January-March 2011, covering the same questions as the original baseline.

- We administered additional production surveys and time use surveys. The production surveys were conducted on the sample from treatment groups A and C (in September 2011 and February 2012) and the time use surveys on the full sample (in September 2011, February 2012 and May 2012).

- Administrative data from the dairy was used to construct indicators of loan recovery, repossession, early repayment and late repayment collection actions

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The 1804 farmers were randomly divided into the following groups of loan contracts:

Group A: an asset collateralized loan that required a standard small deposit of Ksh 1,000 (4%) from the borrower [510 farmers]

Group G: an asset collateralized loan that required a single guarantor to back Ksh 5,000 (21%) of the loan against default in addition to the standard small deposit of Ksh 1,000 (4%) from the borrower [425 farmers]

Group D: an asset collateralized loan that required a larger deposit of Ksh 5000 (21%) along with the standard small deposit of Ksh 1,000 (4%), all from the borrower [450 farmers]

Group C: a 100% cash collateralized joint liability loan that required up to 3 guarantors to pledge Ksh 16,000 (2/3rd of the loan amount) against default in addition to a deposit of Ksh 8000 (1/3rd of loan amount) from the borrower [419 farmers]

In addition, the farmers in Groups D and G were further split into two sub-groups to isolate the effect of guarantors and deposit requirement on farmers. We randomly divided Group D & G into the following sub-groups, Group DM , Group DW , Group GM , and Group GW wherein M implies maintained and W implies waived.

Group GM - The terms of the loan and guarantor deposit amounts were maintained

Group GW - After the first month installment, the guarantors were released of their responsibility for the loan in the event of default and their deposits of Ksh 5000 were returned.This implied that the farmers in this sub-group assumed full responsibility for repayment with the asset (water tank) as collateral, just as in Group A.

Group DM - The terms of the loans and deposit requirements were maintained.

Group DW - After the first month installment , the farmers were given back Ksh 5000 (21%) of their deposit. This left the farmers in this sub-group with the standard small deposit of Ksh 1000 (4%) just as in Group A.

All farmers in these two groups are informed of the 50% possibility of their loans being modified at the time they sign their loan agreements.

As a result of the sub-division, all the farmers in Group A, Group DW, and Group GW have identical loan terms of having Ksh 1000 deposit, no guarantors, and being asset-collateralized. Therefore, any difference in take-up and repayment rates across the groups can be attributed to the underlying characteristics derived from the selection of the sample. Any difference in repayment in Group DM and Group DW is due to the incentive effect of having a larger deposit (Ksh 6000 vs Ksh 1000); and any difference between Group GM, and Group GW can be attributed to the incentive effects of requiring a guarantor.
Experimental Design Details
Randomization Method
Randomization was done by computer
Randomization Unit
Randomization was conducted at the farmer level, stratified by whether farmers had piped water or not in the baseline
Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters
No clusters
Sample size: planned number of observations
The number of observations varied across the surveys as described above. The total number of farmers in the main study was 1804.
Sample size (or number of clusters) by treatment arms
Phase 1: 1804 farmers - the main study is based on this sample of farmers (though a lot of the follow up surveys focused on farmers in Groups A and C)

Phase 2: 2600 farmers
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Institutional Review Boards (IRBs)

IRB Name
UC Berkeley Office for the Protection of Human Subjects
IRB Approval Date
IRB Approval Number
IRB Name
UQAM Comite Institutionnel d'ethique de la rescherche avec des etres humains
IRB Approval Date
IRB Approval Number
IRB Name
IRB Approval Date
IRB Approval Number


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Program Files

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