Information Frictions and Take-up of Government Credit Programs

50 Pages Posted: 5 Jul 2023 Last revised: 1 Aug 2023

See all articles by Apoorv Gupta

Apoorv Gupta

Dartmouth College

Jacopo Ponticelli

Northwestern University - Kellogg School of Management; NBER

Andrea Tesei

Queen Mary University of London - School of Economics and Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Date Written: July 31, 2023

Abstract

Most governments in developing countries offer subsidized credit programs to the agricultural sector. We document that farmers often lack information on how these programs work, their eligibility criteria and loan terms offered. We study the impact of information frictions on credit take-up by exploiting plausibly exogenous variation in the construction of new mobile phone towers in rural areas of India without previous mobile phone coverage. Areas receiving coverage experience higher take-up of agricultural credit. The effects are concentrated in short-term credit to small farms, which have been the target of a major government subsidized credit program, the Kisan credit cards.

Keywords: Mobile phones, India, Shared Mobile Infrastructure Scheme (SMIS), Kisan credit cards, Kisan call centers.

JEL Classification: G21, Q16, E51

Suggested Citation

Gupta, Apoorv and Ponticelli, Jacopo and Tesei, Andrea, Information Frictions and Take-up of Government Credit Programs (July 31, 2023). Available at SSRN: https://ssrn.com/abstract=4496550 or http://dx.doi.org/10.2139/ssrn.4496550

Apoorv Gupta

Dartmouth College ( email )

Department of Sociology
Hanover, NH 03755
United States

Jacopo Ponticelli (Contact Author)

Northwestern University - Kellogg School of Management ( email )

2211 Campus Dr
Evanston, IL 60208
United States

HOME PAGE: http://www.kellogg.northwestern.edu/faculty/ponticelli/index.html

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Andrea Tesei

Queen Mary University of London - School of Economics and Finance ( email )

Lincoln's Inn Fields
Mile End Rd.
London, E1 4NS
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

Houghton Street
London WC2A 2AE
United Kingdom

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