Fintech and Household Resilience to Shocks: Evidence from Digital Loans in Kenya

47 Pages Posted: 4 Mar 2019

See all articles by Prashant Bharadwaj

Prashant Bharadwaj

University of California, San Diego (UCSD) - Department of Economics

William Jack

Georgetown University

Tavneet Suri

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: February 2019

Abstract

Developing country lenders are taking advantage of fintech tools to create fully digital loans on mobile phones. Using administrative and survey data, we study the take up and impacts of one of the most popular digital loan products in the world, M-Shwari in Kenya. While 34% of those eligible for a loan take it, the loan does not substitute for other credit. The loans improve household resilience: households are 6.3 percentage points less likely to forego expenses due to negative shocks. We conclude that while digital loans improve financial access and resilience, they are not a panacea for greater credit market failures.

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Suggested Citation

Bharadwaj, Prashant and Jack, William and Suri, Tavneet, Fintech and Household Resilience to Shocks: Evidence from Digital Loans in Kenya (February 2019). NBER Working Paper No. w25604. Available at SSRN: https://ssrn.com/abstract=3346223

Prashant Bharadwaj (Contact Author)

University of California, San Diego (UCSD) - Department of Economics ( email )

9500 Gilman Drive
La Jolla, CA 92093-0508
United States

William Jack

Georgetown University

Washington, DC 20057
United States

Tavneet Suri

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

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