Expanding Access to Finance with Microequity

Last registered on August 01, 2022


Trial Information

General Information

Expanding Access to Finance with Microequity
Initial registration date
July 22, 2022

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
July 26, 2022, 1:40 PM EDT

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

Last updated
August 01, 2022, 1:36 PM EDT

Last updated is the most recent time when changes to the trial's registration were published.


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Primary Investigator

University of Illinois - Urbana Champaign

Other Primary Investigator(s)

PI Affiliation

Additional Trial Information

In development
Start date
End date
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Despite improvements in financial inclusion, many small firms in developing countries remain capital-constrained, and conventional microcredit has had limited success in improving firm profitability and growth (Banerjee et al, 2016, 2019). Financing has typically been extended in the form of loans with rigid repayment plans and stark consequences for default. In this project, we aim to test the effects of a promising alternative to debt contracts: Equity Financing. We work with a microfinance institution (MFI) to design equity contracts in which clients are provided with a productive asset (a set of goats) and split the proceeds of the sale of the asset (i.e. the difference between the sale price of the fattened goats and their purchase price) at a fixed rate with the MFI. We market this product to livestock farmers alongside a flexible debt contract whose payment structure matches the asset’s production timeline (i.e. due on the sale date of the goats). To date, access to equity financing has typically been restricted to large, audited firms, and research outside of these contexts is scarce outside of a small-scale pilot (de Mel et al. 2018). Relative to the debt-financing status quo, expanding equity finance to small-scale entrepreneurs could affect both the type of client that participates in the formal financial market (selection effects), as well as their outcomes conditional on participation (contract effects). Our experiment aims to test both the financial inclusion effects of a substantive departure in contract structure, as well as the potential effects on client and bank outcomes of the contract relative to a best-practice alternative (flexible credit) as well as a pure control group.
External Link(s)

Registration Citation

Haggag, Kareem and Adam Osman. 2022. "Expanding Access to Finance with Microequity." AEA RCT Registry. August 01. https://doi.org/10.1257/rct.9797-1.1
Experimental Details


We will provide access to the following new products:

Micro-Equity (Revenue Sharing):
The equity product provides financing in the form of an in-kind transfer of young goats (equivalent to 10,000 EGP, or roughly ~$5300 as of July 2022, providing 7-10 goats depending on market prices). The borrower is expected to take care of these goats (including by feeding them and walking them) over the course of 6 months. At the end of the 6 months, they are expected to sell the goats on the market for a profit. The profit comes from an increase in the weight of the goat which is sold for its meat. When sold, the market price received is allocated by first returning the original amount of the financing (i.e. 10,000 EGP) and then splitting the remaining funds, with one-third going to the financial institution and two-thirds going to the borrower. For example, if the fattened goats sell for 16,000 EGP, the borrower will keep 4,000 EGP and the bank will receive 12,000 EGP.

Flexible Micro-loan:
The micro-loan will provide similar financing the form of an in-kind transfer of young goats (again, equivalent to 10,000 EGP, or roughly ~$530 as of July 2022, providing 7-10 goats depending on market prices). Borrowers will then be expected to repay these funds as well as an additional 13.5% in interest fees 6 months after disbursement (i.e. the bank will received 11,350 EGP at the end of the loan cycle). These loans differ from existing credit contracts because they don’t require repayment until 6 months after disbursement. Standard loans in this market require repayment starting on a monthly basis even though this is not in line with the cashflow timing of agricultural products like goats.
Intervention Start Date
Intervention End Date

Primary Outcomes

Primary Outcomes (end points)
Take-up; Sale Prices; Income
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
Individuals will be informed about the two products mentioned above (micro-equity & micro-credit) and asked to indicate their interest. Conditional on their interest they will be randomized into a group that gets equity, a group that gets debt, or control. For those that get financing they will be randomized further into a group that gets additional monitoring, in the form of a regular visit by a veterinarian.
Experimental Design Details
Not available
Randomization Method
Randomization done in office by a computer
Randomization Unit
Randomization will be at the individual level
Was the treatment clustered?

Experiment Characteristics

Sample size: planned number of clusters
Sample size: planned number of observations
1500 borrowers
Sample size (or number of clusters) by treatment arms
600 equity, 300 debt, 600 control
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)

Institutional Review Boards (IRBs)

IRB Name
University of Illinois
IRB Approval Date
IRB Approval Number