Promises and pitfalls of digital credit: Empirical evidence from Kenya
2021 | journal article; research paper. A publication with affiliation to the University of Göttingen.
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- Authors
- Johnen, Constantin; Parlasca, Martin; Mußhoff, Oliver
- 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.
- Issue Date
- 2021
- Journal
- PLoS One
- Organization
- Department für Agrarökonomie und Rurale Entwicklung
- eISSN
- 1932-6203
- Language
- English
- Sponsor
- Open-Access-Publikationsfonds 2021