Year: 2021
Type: article
Study design: Observational Study
Abstract: Digital credit is a recent innovation that raises hopes of improving credit access in developing countries. However, up until now, empirical research on the extent to which digital credit actually reaches people who are otherwise excluded from conventional credit markets and whether increased credit access is sustainable or threatened by high default and blacklisting rates is very scarce. Using representative data from Kenya, this article shows that digital credit increases borrowing opportunities, including for people less likely to otherwise have credit access in the conventional credit markets. However, we find that digital credit borrowing is also responsible for 90% of all blacklistings, which is partially driven by higher default rates in the digital credit market but also by a higher probability that digital credit defaults lead to blacklisting of the borrower, compared to defaults in other credit markets.
Source: PLoS ONE
Institution: University of Göttingen
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
SDG: Reduced inequalities
Open Access status: gold
Estimated APC paid: $1,960
OpenAlex ID: W3183552928