Self-selection into credit markets: Evidence from agriculture in Mali

Arbeitspapier

We partnered with a micro-lender in Mali to randomize credit offers at the village level. Then, in no-loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with respect to agricultural investment. In loan-villages, we gave grants to a random subset of farmers who (endogenously) did not borrow. These farmers have lower - in fact zero - marginal returns to the grants. Thus we find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self-select into lending programs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economic Growth Center Discussion Paper ; No. 1042

Classification and Topics

• Classification: Wirtschaft ; Firm Behavior: Theory ; Microeconomic Analyses of Economic Development ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance ; Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets ; Agricultural Finance
• Subject: credit markets ; agriculture ; returns to capital ; Agrarkredit ; Mikrofinanzierung ; Kleinbauern ; Investitionsentscheidung ; Gewinn ; Liquiditätsbeschränkung ; Landwirtschaft ; Mali

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Beaman, Lori ; Karlan, Dean ; Thuysbaert, Bram ; Udry, Christopher
• Event: Veröffentlichung
• (who): Yale University, Economic Growth Center
• (where): New Haven, CT
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/109694
• Last update: 10.03.2025, 11:42 AM CET