The Impact of Digital Credit in Developing Economies: A Review of Recent Evidence

28 Pages Posted: 14 Aug 2023

See all articles by Jonathan Robinson

Jonathan Robinson

University of California, Santa Cruz

David Sungho Park

KDI School of Public Policy and Management

Joshua Evan Blumenstock

University of California, Berkeley

Date Written: August 3, 2023

Abstract

In recent years, a new generation of “digital credit” products have transformed the consumer lending landscape in many low- and middle-income countries. Offering short- term, high-interest loans via mobile phones or other digital platforms, these products have become wildly popular. This article reviews the small but emerging evidence on the welfare impacts of digital credit. These studies document very high rates of takeup - well in excess of traditional microcredit - despite the fact that customers often do not understand the terms of their loans. Overall, there is little evidence that access to credit has consistent positive impacts on borrower welfare, though two impact evaluations document positive effects on resilience and subjective well-being, respectively. No study finds statistically significant negative impacts of digital credit.

Suggested Citation

Robinson, Jonathan and Park, David Sungho and Blumenstock, Joshua Evan, The Impact of Digital Credit in Developing Economies: A Review of Recent Evidence (August 3, 2023). KDI School of Pub Policy & Management Paper No. 23-04, Available at SSRN: https://ssrn.com/abstract=4540063 or http://dx.doi.org/10.2139/ssrn.4540063

Jonathan Robinson

University of California, Santa Cruz ( email )

1156 High St
Santa Cruz, CA 95064
United States

David Sungho Park (Contact Author)

KDI School of Public Policy and Management ( email )

P.O. Box 184
Seoul, 130-868
Korea, Republic of (South Korea)

Joshua Evan Blumenstock

University of California, Berkeley ( email )

102 South Hall
Berkeley, CA 94720-4600
United States

HOME PAGE: http://www.jblumenstock.com

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