Can Warm Glow Alleviate Credit Market Failures? Evidence from Online Peer-to-Peer Lenders
Bibliographic Data
| ID | 4360285 |
|---|---|
| Authors | Matthieu Chemin (McGill University), Joost De Laat (0000-0003-1637-3277) |
| Year | 2013 |
| Volume | 61 |
| Issue | 4 |
| Pages | 825-858 |
| Publication date | 2013-07-01 |
| Open Access | No |
| Type | ARTICLE |
| Venue | Economic Development and Cultural Change (JOURNAL) |
| Journal identifiers | ISSN: 0013-0079 • E-ISSN: 1539-2988 |
| Publisher | University of Chicago Press (PUBLISHER • US) |
| DOI | 10.1086/670374 |
| OpenAlex | W3125390650 |
| Language | EN |
| Citations received | 1 |
| References cited | 8 |
This article looks at an institutional innovation in which Western investors lend peer-to-peer to poor country enterprises. Using a unique data set from an online lending platform called MYC4, we find that MYC4’s Western lenders grant lower interest rates to pro-poor, socially responsible, and pro-female African projects. Using a novel instrumental variable to account for interest rates’ endogeneity, we find that these lower interest rates substantially improve the repayment performance of borrowers and do not reflect profit-maximizing behavior. This new way to organize finance improves credit market efficiency and the success rate of poor country enterprises
Bond market · Business · Econometrics · Economics · Endogeneity · Instrumental variable · Interest rate · Microeconomics · Monetary economics · Peer-to-peer · Profit (economics) · Economic Growth and Development · FinTech, Crowdfunding, Digital Finance · Microfinance and Financial Inclusion
| Citations per year | 0.13 |
|---|---|
| Citation span | 2018 - 2018 (1) |
| Highly cited | No |