Follow the money: Methods for identifying consumption and investment responses to a liquidity shock

Arbeitspapier

Identifying the impacts of liquidity shocks on spending decisions is difficult methodologically but important for theory, practice, and policy. Using seven different methods on microenterprise loan applicants, we find striking results. Borrowers report uses of loan proceeds strategically, and more generally their reporting depends on elicitation method. Borrowers also interpret loan use questions differently than the key counterfactual: spending that would not have occurred sans loan. We identify the counterfactual using random assignment of loan approvals and short-run follow-up elicitation of major household and business cash outflows, and estimate that about 100% of loan-financed spending is on business inventory.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Economic Growth Center Discussion Paper ; No. 1034

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Empirical Analysis ; Firm Behavior: Empirical Analysis ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Microeconomic Analyses of Economic Development ; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
• Subject: loan use ; consumption ; investment ; liquidity constraint ; liquidity shock ; fungibility ; microcredit ; microenterprise ; Betriebliche Liquidität ; Schock ; Mikrofinanzierung ; Kleinstunternehmen ; Investitionsentscheidung ; Verbraucherausgaben ; Philippinen

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Karlan, Dean ; Osman, Adam ; Zinman, Jonathan
• Event: Veröffentlichung
• (who): Yale University, Economic Growth Center
• (where): New Haven, CT
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/98216
• Last update: 10.03.2025, 11:45 AM CET