Two Sides of the Same Rupee? Comparing Demand for Microcredit and Microsaving in a Framed Field Experiment in Rural Pakistan | Zendy

Afzal Uzma | Zendy; d’Adda Giovanna | Zendy; Fafchamps Marcel | Zendy; Quinn Simon | Zendy; Said Farah | Zendy

Open Access

Two Sides of the Same Rupee? Comparing Demand for Microcredit and Microsaving in a Framed Field Experiment in Rural Pakistan

Author(s) -

Afzal Uzma,

d’Adda Giovanna,

Fafchamps Marcel,

Quinn Simon,

Said Farah

Publication year - 2018

Publication title -

the economic journal

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 4.683

H-Index - 160

eISSN - 1468-0297

pISSN - 0013-0133

DOI - 10.1111/ecoj.12512

Subject(s) - microfinance , economics , lump sum , rupee , payment , field (mathematics) , microeconomics , monetary economics , economic growth , finance , exchange rate , mathematics , pure mathematics

We use a field experiment to test whether saving and borrowing satisfy demand for lump‐sum accumulation from regular deposits. Inspired by ROSCAs, we offer different credit and saving contracts to subjects. We find that individuals often accept both credit and saving contract across experimental waves. This behaviour can be rationalised by assuming that individuals seek lump‐sum payments and struggle to hold savings. Structural estimation of this model accounts for the behaviour of 75% of participants. Of these, two‐thirds have high demand for lump‐sum accumulation but savings difficulties. These results imply that the distinction between microlending and microsaving is largely illusory.

The content you want is available to Zendy users.

Already have an account? Click here to sign in.

Having issues? You can contact us here

Accelerating Research