Assessing the Reliability of Self‐reported Income Information in Informal Small Business Lending through a Bogus Pipeline ExperimentUlf Römer, Oliver Musshoff, Ron Weber and Calum Turvey Journal of Agricultural Economics, 2018, vol. 69, issue 3, 726-738 Abstract: Coping with asymmetric information plays a major role in successful small business lending. Our purpose is to determine if small business applicants report their income information correctly when requesting a loan. We use a randomised controlled trial bogus pipeline experiment, established during a typical cash‐flow analysis of a bank for small businesses in the Philippines. The bogus pipeline approach is commonly applied in social science and aims to increase the rate of truth telling by informing participants that answers will be verified by a lie detector. The experimental data, which include 243 observations of credit clients that are mainly from the agricultural and food value chain, served to identify asymmetric information. Additionally, debtors’ repayment behaviour for approved loans was observed by the bank. Our results indicate that loan applicants of the treatment group report lower incomes, an effect which is most pronounced in lower income quantile. Our analyses also reveal higher loan delinquencies in the control group. Date: 2018 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jageco:v:69:y:2018:i:3:p:726-738 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Agricultural Economics is currently edited by David Harvey More articles in Journal of Agricultural Economics from Wiley Blackwell |
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