Truth and consequences: Bogus pipeline experiment in informal small business lending

Ulf Römer, Oliver Musshoff, Ron Weber and Calum Turvey

No 260765, Department of Agricultural and Rural Development (DARE) Discussion Papers from Georg-August-Universitaet Goettingen, Department of Agricultural Economics and Rural Development (DARE)

Abstract: The prevention of asymmetric information plays a major role in successful small business lending. The purpose of this research is to determine if small business applicants report their income information correctly when requesting a loan. Therefore, a randomized controlled trial bogus pipeline experiment was set up during a typical cash-flow analysis of a bank for small businesses in the Philippines. Results indicate that loan applicants of the treatment group reported a lower income, an effect which is most pronounced in the lowest income percentile. Moreover, our analyses reveal higher loan delinquencies in the control group.

Keywords: Agribusiness; Agricultural Finance; Financial Economics (search for similar items in EconPapers)
Pages: 18
Date: 2017
New Economics Papers: this item is included in nep-ent, nep-exp, nep-iue, nep-mfd and nep-sea
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Working Paper: Truth and consequences: Bogus pipeline experiment in informal small business lending (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:gadadp:260765

DOI: 10.22004/ag.econ.260765

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