Impact of psychometric credit scoring as an alternative to collateral for women entrepreneurs in Ethiopia

This study partnered with the Ethiopian MFI Wasasa to test the impact of granting relatively large, uncollateralized loans to women business owners after screening via a psychometric loan appraisal technology. Potential borrowers were required to present themselves at the MFI's branches to apply for the loan and take the psychometric test. If a woman passed the test cut-off score, she was deemed eligible for the loan, and was randomised with 50-50 probability into the treatment or control group. All eligible women were subsequently required to provide documentation and pass a business appraisal; then their treatment status was revealed, and women who had been assigned to treatment and who had also met the documentation and business appraisal requirements were granted a loan. We analyse the impact of the loan using baseline data collected at the time a potential borrower presented herself at the branch between April 2018 and March 2020, and endline data from a face-to-face follow-up survey in September 2021. A short midline phone survey was also conducted with part of the sample in May 2020, to assess immediate impacts of COVID.