REPAY AS YOU EARN: LOAN REPAYMENT FREQUENCY, CASH FLOWS, AND SAVINGS OF HOUSEHOLDS. (8th October 2012)

• Record Type: Journal Article
• Authors: Ravi, Shamika
• Is Part Of: Journal of international development. Volume 26:Number 4(2014:May)
• Page Start: 438
• Page End: 453
• Publication Date: 2012-10-08
• Subjects: Economic development projects -- Developing countries -- Periodicals; Developing countries -- Economic policy -- Periodicals; Developing countries -- Foreign economic relations -- Periodicals; Economic development -- Periodicals; 330.91724
• DOI: 10.1002/jid.2884
• Languages: English
• ISSNs: 0954-1748

Abstract

<abstract abstract-type="main"> <title>Abstract</title> <p>This paper analyses household cash management and provides evidence that a household's access to credit is directly improved by its savings. Households that are unable to save tie loan repayment to cash flows and repay as soon as money is earned. We find that income frequency increases loan repayment frequency by 32%, but this effect reduces significantly on controlling for savings. Results also show that households on average pay 3.6% higher interest on loans with repayment schedules matching household cash flows. We show this by exploiting unique 'preferred' loan repayment data available for each household and by using presence of marriageable‐age girls in household as instrument for savings. Copyright © 2012 John Wiley &amp; Sons, Ltd.</p> </abstract>