Microequity and Mutuality: Experimental Evidence on Credit with Performance-Contingent Repayment

Organized by the Private Sector Development Research Network

Friday, 9th of June 2023 from 9-10am EST

ABOUT THE SEMINAR 

The authors of the paper that will be presented have conducted one of the first field experiments of a performance-contingent microfinance contract. A large food multinational wishes to help micro-distributors in its supply chain with the financing of a productive asset. Working with the firm in Kenya, the authors compare asset financing under a traditional debt contract to three alternatives: (i) a novel equity-like financing contract, (ii) a hybrid debt-equity contract, and (iii) an index-insurance financing contract. Experimental results reveal large positive impacts from the contractual innovations. These findings demonstrate the economic appeal of microfinance contracts that leverage improved observability of performance to achieve a greater sharing of risk and reward.

Link to the paper is here

ABOUT THE SPEAKER

Simon Quinn

Associate Professor of Economics, University of Oxford

Dr. Quinn does research at the intersection of labor economics and development economics, with a particular interest in the role of firms and other organizations. He uses survey data to study firms, organizations, and labor markets in developing economies. He is currently working on entrepreneurship and networks, youth unemployment and labor market access, novel models of microfinance, and community organizations. He holds an M.Phil and a D.Phil in Economics from the University of Oxford and a Bachelor of Laws and a Bachelor of Economics from the University of Queensland.

Details of his work can be found at http://www.simonrquinn.com/

Watch full seminar here