Intra-Household Monitoring and the Dark Side of Credit Access

Abstract

Using a unique micro-loan application data set in China, we study the effect of intra-household monitoring in credit access on borrower welfare. In particular, we show that men are more likely than women to evade intra-household monitoring when accessing credit. Using the Chinese government's crackdown on prostitution in Dongguan as a shock, we find that men become less likely to evade intra-household monitoring when accessing credit after the crackdown, suggesting that credit access without intra-household monitoring may lead to welfare destroying spending.

Keywords: Intra-household Monitoring, Credit Access, Consumer Loan, Household Finance, Prostitution

JEL Classification: D13, G21, G41, J12, J16