Econometrica

Journal Of The Econometric Society

An International Society for the Advancement of Economic
Theory in its Relation to Statistics and Mathematics

Edited by: Guido W. Imbens • Print ISSN: 0012-9682 • Online ISSN: 1468-0262

Econometrica: Sep, 2023, Volume 91, Issue 5

Selection into Credit Markets: Evidence from Agriculture in Mali

https://doi.org/10.3982/ECTA18916
p. 1595-1627

Lori Beaman, Dean Karlan, Bram Thuysbaert, Christopher Udry

We use a two‐stage experiment on agricultural lending in Mali to test whether selection into lending is predictive of heterogeneous returns to capital. Understanding this heterogeneity, and the selection process which reveals it, is critical for guiding modeling of credit markets in developing countries, as well as for policy. We find such heterogeneity: returns to capital are higher for farmers who borrow than for those who do not. In our first stage, we offer loans in some villages and not others. In the second stage, we provide cash grants to a random subset of all farmers in villages where no loans were offered, and to a random subset of the farmers who do not borrow in villages where loans were offered. We estimate seasonal returns to the grant of 130% for would‐be borrowers, whereas we find returns near zero for the sample representative of non‐borrowers. We also provide evidence that there are some farmers—particularly those that are poor at baseline—that have high returns but do not receive a loan.


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Supplemental Material

Supplement to "Selection into Credit Markets: Evidence from Agriculture in Mali"

Lori Beaman, Dean Karlan, Bram Thuysbaert, and Christopher Udry

This online appendix contains material not found within the manuscript.

Supplement to "Selection into Credit Markets: Evidence from Agriculture in Mali"

Lori Beaman, Dean Karlan, Bram Thuysbaert, and Christopher Udry

This zip file contains the replication files for the manuscript.