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The price effects of cash versus in-kind transfers
This paper examines the effect of cash versus in-kind transfers on local prices. Both types of transfers increase the demand for normal goods; in-kind transfers also increase supply in recipient communities, which should cause prices to fall relative to cash transfers. We test and confirm this prediction using a program in Mexico that randomly assigned villages to receive boxes of food (trucked into the village), equivalently valued cash transfers, or no transfers. We find that prices are significantly lower under in-kind transfers compared with cash transfers; relative to the control group, ...
Working Paper
"Let Us Put Our Moneys Together": Minority-Owned Banks and Resilience to Crises
Minority-owned banks have a mission to promote economic well-being in their communities. In particular, specialization in lending based on a central mechanism of shared-minority identity can yield an advantage in serving community needs through times of financial and economic crises. To test this proposition, we analyze individual banks in their local market context from 2006 to 2020. Results suggest minority-owned banks improve economic resilience in their communities during the global financial crisis (GFC) and the COVID-19 crisis through increased small business and household lending, but ...
Working Paper
Serving the Underserved: Microcredit as a Pathway to Commercial Banks
A large-scale microcredit expansion program---together with a credit bureau accessible to all lenders---can enable unbanked borrowers to build a credit history, facilitating their transition to commercial banks. Loan-level data from Rwanda show the program improved access to credit and reduced poverty. A sizable share of first-time borrowers switched to commercial banks, which cream-skim less risky borrowers and grant them larger, cheaper, and longer-maturity loans. Switchers have lower default risk than non-switchers and are not riskier than other bank borrowers. Switchers also obtain better ...
Working Paper
Can Self-Help Groups Really Be 'Self-Help'?
We provide an experimental and theoretical evaluation of a cost-reducing innovation in the delivery of "self-help group" microfinance services, in which privatized agents earn payments through membership fees for providing services. Under the status quo, agents are paid by an outside donor and offer members free services. In our multi-country randomized control trial we evaluate the change in this incentive scheme on agent behavior and performance, and on overall village-level outcomes. We find that privatized agents start groups, attract members, mobilize savings, and intermediate loans at ...
Working Paper
Nonlinear Pricing in Village Economies
This paper examines the price of basic staples in rural Mexico. We document that nonlinear pricing in the form of quantity discounts is common, that quantity discounts are sizable for typical staples, and that the well-known conditional cash transfer program Progresa has significantly increased quantity discounts, although the program, as documented in previous studies, has not affected on average unit prices. To account for these patterns, we propose a model of price discrimination that nests those of Maskin and Riley (1984) and Jullien (2000), in which consumers differ in their tastes and, ...
Working Paper
The Epidemic Effect: Epidemics, Institutions and Human Capital Development
Epidemics can negatively affect economic development unless they are mitigated by global governance institutions. We examine the effects of sudden exposure to epidemics on human capital outcomes using evidence from the African meningitis belt. Meningitis shocks reduce child health outcomes, particularly when the World Health Organization (WHO) does not declare an epidemic year. These effects are reversed when the WHO declares an epidemic year. Children born in meningitis shock areas in a year when an epidemic is declared are 10 percentage points (pp) less stunted and 8.2 pp less underweight ...