Investing in the Next Generation: The Long-Run Impacts of a Liquidity Shock

Agte, Patrick; Bernhardt, Arielle; Field, Erica; Pande, Rohini; Rigol, Natalia

doi:10.3386/w29816

2022

DOI: 10.3386/w29816

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Investing in the Next Generation: The Long-Run Impacts of a Liquidity Shock

Patrick Agte¹,

Arielle Bernhardt²,

Erica Field³

et al.

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2024

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Asset-Based Microfinance for Microenterprises: Evidence from Pakistan

Bari,

Malik,

Meki

et al. 2024

American Economic Review

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We run a field experiment offering graduated microcredit clients the opportunity to finance a business asset worth four times their usual borrowing limit. We implement this using a hire-purchase contract; our control group is offered a zero interest loan at the usual borrowing limit. We find large, significant, and persistent effects: treated microenterprise owners run larger businesses with higher profits; consequently, household consumption increases, particularly on food and children’s education. A dynamic structural model with nonconvex capital adjustment costs rationalizes our results and allows counterfactual analysis; this highlights the potential for welfare improvements through large capital injections that are financially sustainable. (JEL C93, D22, G21, G32, L25, O14, O16)

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Asset-Based Microfinance for Microenterprises: Evidence from Pakistan

Bari,

Malik,

Meki

et al. 2024

American Economic Review

View full text Add to dashboard Cite

show abstract

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Investing in the Next Generation: The Long-Run Impacts of a Liquidity Shock

Cited by 1 publication

References 0 publications

Asset-Based Microfinance for Microenterprises: Evidence from Pakistan

Asset-Based Microfinance for Microenterprises: Evidence from Pakistan

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