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"Decentralized Targeting of Agricultural Credit Programs: Private Agents or Local Governments?" by Dr. Sujata Visaria

Event information
Economics
Seminar
Wednesday, 30 May 2018
KK1121
  • 4:30pm - 6pm

 

Economics Seminar

Author:

  • Sujata Visaria
    The Hong Kong University of Science and Technology

 

This paper reports the results from a field experiment conducted in rural India where an agent from the local community recommends borrowers for individual liability loans. The agent, who is incentivized using commissions that depend on repayments, is either a local trader (TRAIL) or a person appointed by the local government (GRAIL). We study the effects of the loans on borrower outcomes (production and income) and find that TRAIL performs significantly better than GRAIL. Our results suggest that this difference is not caused by GRAIL agents' worse information about borrower ability; instead GRAIL agents seem to generate worse performance incentives for the borrowers they select. This is likely because GRAIL agents need to ensure political success for their party in the upcoming election.